Summary:

On 23 May 2024, the Algerian national oil firm, Sonatrach, signed a deal with the American oil and gas firm, ExxonMobil that allows for the exploration of natural gas resources in central and southern Algeria. 

This agreement marks the conclusion of talks that began earlier in the year, in January, as Algeria sought out partners to boost gas exports. 

The exploration agreement covers the Ahnet and Gourara basins of Algeria, which are just two of the eighteen new discoveries this year made by Sonatrach and partners. 

Following the EU’s ban on Russian oil imports, oil and gas firms including ExxonMobil, Chevron Corp., Baker Hughes and Maire Tecnimont, are vying for opportunities in Algeria’s hydrocarbon industry. Algeria has the 10th largest natural gas reserves in the world. 

Additionally, on 27 May 2024, Slovenia inked a deal with Sonatrach to increase gas exports to Slovenia. This deal will add 200 thousand circular mils (mcm) of gas per year to the preceding 300 mcm per year contract set to end in 2025. 

Algeria’s hydrocarbon industry seems to be not only growing internationally, but domestically too, as Sonatrach looks to subcontract medium- and small-sized oil and gas projects to local companies. 

Outlook: 

Algeria’s hydrocarbon industry will likely see more investments as the country has recently sought to facilitate external investment in the nation’s oil and gas resources. On the other hand, some researchers and gas traders have reservations on the prospect of European investment. 

The newfound cooperation with ExxonMobil will likely benefit Algeria’s current oil and gas trade with Italy and Spain that totaled $22.58 B in 2022, as Sonatrach will be able to boost their production once the Ahnet and Gourara basins have been explored, and new extraction sites constructed. 

Although there may not be immediate effects, once the extraction process begins, the air quality in southern Algeria is likely to get even worse as the fracking of natural gasses can emit harmful air pollution that may pose a health risk to those living in the area. 

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