Algeria’s state-owned energy giant Sonatrach has signed a $5.4 billion exploration and production agreement with Saudi Arabia’s Midad Energy, marking one of the country’s biggest foreign investment deals in recent years, according to local media outlet Ennahar TV on Monday.
The 30-year production sharing contract, which can be extended by an additional 10 years, covers oil and gas exploration and production activities in the Illizi Basin, located in eastern Algeria.
According to Ennahar TV, the agreement includes an exploration phase lasting up to seven years, with total investments estimated at $5.4 billion.
The deal highlights Algeria’s growing efforts to attract global investors to its energy sector as it looks to expand hydrocarbon output and strengthen its role as a key gas supplier to Europe.
The OPEC member nation is also close to finalising landmark agreements with US supermajors ExxonMobil and Chevron to develop its vast shale gas resources, signalling a strategic push to diversify production and increase exports of both pipeline gas and liquefied natural gas (LNG).
Algeria already supplies significant gas volumes to Europe via pipelines and LNG terminals. With European nations seeking to reduce reliance on Russian gas following Moscow’s invasion of Ukraine, Algeria is emerging as a crucial alternative energy partner for the continent.
The North African country boasts substantial conventional natural gas reserves and holds the third-largest shale gas reserves globally, after China and Argentina, according to industry estimates.
Beyond Midad Energy’s entry, Algeria has continued to attract interest from other international players. Earlier in 2025, China’s Zhongman Petroleum and Natural Gas Group (ZPEC) secured a licensing contract to explore the Zerafa II gas block in central Algeria, awarded by the National Agency for the Valorization of Hydrocarbon Resources (ALNAFT).
ZPEC’s winning bid came after competition from major European energy companies, including TotalEnergies, Eni, and Equinor, highlighting growing international competition for access to Algeria’s energy potential.
The Sonatrach–Midad Energy partnership further cements Algeria’s ambition to boost exploration, attract foreign investment, and strengthen its position as a regional energy hub.
