Under discussion since last year, the contract between the national company Sonatrach and the Saudi firm Midad Energy North Africa for the exploration and exploitation of hydrocarbons in southern Algeria, in Illizi, was signed yesterday in Algiers by both parties.
The contract includes investments totaling approximately 5.4 billion US dollars, with 288 million allocated to research investments for the exploration and exploitation of hydrocarbons in the Illizi Sud contract area, located in the Illizi Basin about 100 kilometers south of In Amenas, Sonatrach stated in a communiqué.
Regarding the nature of the contract, the Algerian group specified that it is a production-sharing agreement with the Saudi company Midad Energy North Africa. The expected production under the exploitation of the Illizi Sud perimeter is estimated, at the end of the contract period, at 993 million barrels of oil equivalent (boe), including 125 billion cubic meters of gas for commercialization and 204 million barrels of liquid hydrocarbons, comprising 103 million barrels of LPG and 101 million barrels of condensate, according to Sonatrach’s details.
The contract terms stipulate that the exploration and exploitation work in the designated area will be fully financed—100%—by the Saudi partner.
With a duration of 30 years, renewable for an additional 10 years, and including a 7-year exploration period, the contract was signed under the authority of Law No. 19-13 on hydrocarbons, Sonatrach emphasized.
The contract was signed by Sonatrach’s CEO, Rachid Hachichi, and the CEO of Midad Energy North Africa, Sheikh Abdulelah Bin Mohammed Bin Abdullah Al-Aiban, in the presence of the Minister of State, Minister of Hydrocarbons and Mines, Mohamed Arkab; the Ambassador of the Kingdom of Saudi Arabia to Algeria, Dr. Abdullah bin Nasser Abdullah Al-Busairi; as well as the Chairman of the Board of the National Agency for the Valorization of Hydrocarbon Resources (ALNAFT) and the Chairman of the Hydrocarbon Regulatory Authority (ARH).
Sonatrach assured that the work program related to this hydrocarbon contract will be carried out “in strict compliance with environmental requirements, according to the applicable regulations in Algeria,” adding that it will also include the use of the latest technological and digital solutions. Furthermore, local content and subcontracting to national suppliers will be prioritized within the execution of this contract, the same source noted.
It is worth recalling that the signing of this hydrocarbon contract crowns the work related to the Memorandum of Understanding signed between Sonatrach and Midad Energy North Africa on March 3, 2024. Since then, meetings have also taken place between Midad Energy officials and senior Algerian hydrocarbon sector executives, notably with Sonatrach’s CEO in January 2025 and with Minister Arkab in July 2025. Algerian and Saudi representatives also met at NAPEC 2025, held from October 6 to 8 in Oran. The contract signed yesterday is the culmination of these various meetings, reflecting both parties’ will to strengthen bilateral cooperation in hydrocarbon exploration and production and develop other areas linked to the sector’s value chain. It also expresses the Saudi company’s interest in expanding its presence in Algeria, given the investment climate and promising opportunities offered by the sector under the latest hydrocarbons law.