Summary:

On 25 February 2025, Algeria’s state-owned oil company, Sonatrach, and China Petrochemical Corporation Sinopec signed a $850 million deal to explore and develop hydrocarbon deposits in Hassi Berkane North, located in central Algeria. 

Sinopec will autonomously conduct exploration in blocks 428 and 429 of the Hassi Berkane North field for 30 years, renewable once for a period not exceeding ten years.  

Under the production sharing contract, Sonatrach will cover 30% of subsequent investments while Sinopec will assure 70% upon positive exploration outcomes. 

Meanwhile, on 26 February, the Chairman of the National Agency for the Valorization of Hydrocarbon Resources (ALNAFT), stated that 37 international companies expressed their interest in investing in Algerian hydrocarbon during the “Algeria Bid Round 2024” call for tenders. 

Outlook: 

The deal with Sinopec highlights Algeria’s attractiveness for international companies, especially after the issuance of new hydrocarbon and investment legislation  which increased incentives for foreign investors. The resumption of calling for tenders from foreign firms after years of suspension is likely to continue to attract more investments in Algeria’s lucrative extractives sector.  

Algerian development of new energy deposits will help strengthen its position as a leading international energy exporter. Additionally, new investments in the sector will help to increase foreign currency reserves as well as create jobs.  

While engaged in several green energy projects, Algeria will continue to lean heavily on the hydrocarbon energy sector for its economic plans even as it seeks to promote the industrial sector and “diversify exports.” New explorations of oil and gas deposits are likely to help Algeria secure the financial means to move away from dependence on foreign firms exporting oil and gas to a more diverse industrial economy. 

Additionally, the energy sector is likely to continue strengthening Algeria’s influence in multilateral organizations such as the Organization of the Petroleum Exporting Countries (OPEC) or the Gas Exporting Countries Forum (GECF) and, by extension, its diplomatic leadership in the region. 

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