Summary:

On 7 June 2024, the Algerian national oil firm, Sonatrach, signed a memorandum of understanding (MoU) with the Chinese oil and gas enterprise, Sinopec, to further cooperate. This cooperation will stem in five directions: areas of exploration, skills development, renewable energy, petrochemistry, and petroleum engineering. 

Sonatrach’s agreement with Sinopec marks the 8th notable deal Sonatrach has signed in 2024 thus far, following its deal with ExxonMobil on May 23rd and six other prior contracts. 

On 11 June 2024, the Chinese technology company, Huawei, signed a MoU with Sonatrach to help Sonatrach undergo a “digital transformation”. This transformation involves the optimization of Sonatrach’s operations and overall improvement in security. 

In more detail, Huawei aims to develop Sonatrach’s technological capabilities with regards to cloud computing, data centers, computer networks, telecommunications, and cyber security. 

As Sonatrach strives to stay competitive and at the top of the hydrocarbon industry in Algeria, a study supports Sonatrach’s decision to extend its technological abilities in noting the entire oil and gas industry’s potential for technological evolution and the prospective benefits said improvements may lead to. 

Outlook: 

Through the series of MoUs signed this year, Sonatrach will likely remain at the head of the hydrocarbon industry in North Africa. This better positions Algeria’s oil-reliant economy to develop the agriculture and tourism industries to diverge from the finite supply of oil and natural gas by developing substantial alternative revenue streams. 

China’s involvement in the Algerian economy is nothing new as Algeria lies in a pivotal geographic position with the potential to facilitate China’s Belt and Road Initiative. This means that it is necessary for China to support and aid Algeria in order to effectively expand its sphere of influence in North Africa and the Middle East. 

This aim has been achieved as a report shows that over 1,000 Chinese companies have already invested in Algeria, with further investment projected well into the future. 

On the other hand, further cooperation with China may estrange Algeria from the West, possibly affecting Algeria’s exports and imports with the EU. Since the EU is Algeria’s largest trade partner, should imports be affected, the standard of living for most Algerian citizens will decline. 

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