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Under discussion since last year, the planned contract between the national company Sonatrach and the Saudi company Midad Energy North Africa for the exploration and exploitation of hydrocarbons in southern Algeria, in Illizi, was signed this Monday in Algiers between the two parties.
The contract provides for investments amounting to around 5.4 billion US dollars, of which 288 million will be intended for research investments for the exploration and exploitation of hydrocarbons in the contractual area of Illizi South, located in the Illizi basin, approximately 100 kilometers south of In Amenas, Sonatrach said in a press release.
Regarding the nature of the contract, the Algerian group specified that it is a production sharing type contract with the Saudi company Midad Energy North Africa. The expected production within the framework of the exploitation of the Illizi South perimeter is estimated, at the end of the contractual period, at 993 million barrels of oil equivalent (boe), including 125 billion cubic meters of gas intended for marketing and 204 million barrels of liquid hydrocarbons, including 103 million barrels of LPG and 101 million barrels of condensate, according to details from Sonatrach.
According to the terms of the contract, it is expected that the exploration and exploitation work on the area in question will be fully financed, i.e. 100%, by the Saudi partner.
With a duration of 30 years which can be extended for an additional 10 years and including a research period of 07 years, this contract was signed under the aegis of Law No. 19-13 on hydrocarbons, underlined Sonatrach.
This contract was signed by the CEO of Sonatrach, 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 in Algeria, Dr Abdullah bin Nasser Abdullah Al-Busairi. Also present at the signing ceremony were the president of the Steering Committee of the National Agency for the Development of Hydrocarbon Resources (ALNAFT), and the president of the Hydrocarbon Regulatory Authority (ARH).
The work program linked to this hydrocarbon contract will be operated “in strict compliance with environmental requirements, in accordance with the regulations in force applicable in Algeria,” assured Sonatrach, adding that it also includes the use of the latest technological and digital solutions. Furthermore, the use of local content and subcontracting with national suppliers is favored, within the framework of the execution of this contract, it is underlined by the same source.
As a reminder, the signing of this hydrocarbon contract crowns the work inherent in the Memorandum of Understanding signed between Sonatrach and Midad Energy North Africa on March 3, 2024. After this date, meetings also took place between Midad Enegy managers and senior officials of the hydrocarbon sector in Algeria, in particular with the CEO of Sonatrach in January 2025, and with Minister Arkab in July 2025. Algerians and Saudis also met at NAPEC 2025, which was held from October 6 to 8 in Oran. The crowning achievement of the various meetings is the contract signed this Monday.
This reflects the desire of both parties to strengthen bilateral cooperation in the exploration and production of hydrocarbons and the development of other areas linked to the sector’s value chain. It is also an expression of the Saudi company’s interest in strengthening its presence in Algeria, given the investment climate and the promising opportunities offered by the sector through the latest hydrocarbons law.