Saudi Arabia’s Midad Energy has signed a landmark $5.4 billion production-sharing agreement with Algeria’s state-owned oil company, Sonatrach, to explore and develop hydrocarbon resources in the Illizi Basin, a resource-rich region near Algeria’s southeastern border with Libya.
The long-term agreement, which spans 30 years, marks one of the largest foreign investments in Algeria’s energy sector in recent years. It underscores the North African nation’s ongoing efforts to attract international partners and modernise its oil and gas industry amid rising competition from other energy producers across Africa and the Middle East.
According to details released by Sonatrach, the deal includes a $288 million investment during the initial seven-year exploration phase. This phase will involve advanced geological surveys, seismic data acquisition, and exploratory drilling to assess the full potential of the Illizi Basin, which is known for its substantial oil and natural gas reserves.
Once commercial viability is confirmed, subsequent phases will focus on the development of production infrastructure, including pipelines, processing facilities, and export terminals designed to support both domestic supply and international exports.
Officials said the partnership aligns with Algeria’s national energy strategy to increase hydrocarbon output, diversify investment sources, and upgrade operational technologies across the sector. It also complements Midad Energy’s growing international portfolio, reflecting Saudi Arabia’s broader goal of expanding its global energy footprint beyond the Gulf region.
Industry analysts have described the deal as a strategic win for both countries. For Algeria, it reinforces the government’s bid to sustain production levels amid aging oil fields, while for Midad Energy, it represents a key opportunity to deepen its presence in North Africa’s upstream market.
Sonatrach’s Chief Executive Officer, Rachid Hachichi, said the agreement demonstrates Algeria’s commitment to fostering long-term partnerships with credible international firms and ensuring energy security through responsible resource development.
The project is expected to generate thousands of local jobs and contribute significantly to Algeria’s foreign exchange earnings once production begins.
