A massive R97 billion (approximately $5.4 billion) deal has been struck between Saudi Arabia's Midad Energy and Algeria's state-owned energy company, Sonatrach. The agreement focuses on exploration and production of oil and gas in Algeria's Illizi Basin, a region located about 100km south of In Amenas, near the Libyan border.
What's the Deal?
The production-sharing contract (PSC) spans 30 years, with an option to extend for an additional 10 years. This includes a seven-year exploration period during which Midad Energy will foot the entire investment bill, including R5.1 billion ($288 million) specifically for exploration activities.
What Will They Find?
Over the contract's lifespan, the Illizi South perimeter is projected to yield a whopping 993 million barrels of oil equivalent. This includes 125 billion cubic metres of gas and 204 million barrels of liquid hydrocarbons, comprised of 103 million barrels of liquid petroleum gas and 101 million barrels of condensate.
Why is this Important?
This deal is significant for several reasons:
- Economic Boost for Algeria: The massive investment will undoubtedly stimulate Algeria's economy.
- Energy Security: Algeria, a member of OPEC, aims to strengthen its position as a global energy supplier while addressing its domestic energy needs.
- Strategic Partnership: The partnership between Sonatrach and Midad Energy demonstrates a growing collaboration between Saudi Arabia and Algeria in the energy sector.
- Technological Advancement: Sonatrach has stated that the project will leverage advanced technological and digital solutions, promoting modernisation within the Algerian energy industry.
The signing of this contract underscores Algeria's commitment to attracting foreign investment and enhancing its oil and gas production capabilities. It also highlights Saudi Arabia's strategic focus on expanding its energy footprint in North Africa.