Algeria’s national oil company announced Thursday that it had signed a memorandum with ExxonMobil to develop two gas fields, a move one analyst called a “big step” for the country’s energy ambitions.
The two companies plan to “study existing opportunities to develop hydrocarbon resources in the Ahnet basin and the Gourara basin”, in southern Algeria, Sonatrach said in a press release.
The agreement was signed in Algiers by the general director of Sonatrach, Rachid Hachichi, and the director of exploration of ExxonMobil, John Ardill.
The companies did not give figures on the scale of the investment or potential reserves in the two basins.
According to Geoff Porter, energy expert and president of North Africa Risk Consulting, this agreement constitutes “a big step for Sonatrach, which has not attracted new oil and gas companies to Algeria for several years.”
The preliminary agreement is expected to result in an exploration and production contract “if ExxonMobil is satisfied with the results,” Porter said. AFP.
However, negotiations for such an agreement could take between 12 and 36 months, he added.
The agreement “opens new development prospects for the Algerian mining sector and demonstrates the desire of the two companies to implement responsible and sustainable exploitation of natural resources,” Hachichi said in the press release.
Ardill said ExxonMobil would bring its “cutting-edge capabilities” and said the deal was an “important first step in creating a partnership that will further unlock Algeria’s resource development potential.”
In June 2023, The Wall Street Journal reported “advanced negotiations” between Sonatrach and ExxonMobil and fellow American oil giant Chevron, to exploit Algeria’s vast gas reserves.
The newspaper said discussions had taken place over rights to exploit conventional gas fields as well as shale gas, which requires the controversial process of hydraulic fracturing to extract it from rocks.
The protocol signed Thursday specifies that the next studies will focus on “operational excellence, technological innovation and respect for the environment”.
Porter said the agreement was “a very positive sign for Algeria” and its efforts to diversify foreign investment in its energy exploration sector.
The agreement “also shows that (foreign) energy companies are seriously considering Algeria’s potential as a guarantor of European energy security,” he added.
“Algeria is important for Europe, Algeria has gas reserves and they are stable. The fact that ExxonMobil thinks Algeria is a good investment destination will be a signal for other companies are considering investing in Algeria.”
