Sonatrach signed a production sharing contract (PSC) with Midad Energy for the Illizi South area, nearly 100 kilometers (62.14 miles) south of In Amenas, Algeria’s national oil and gas company said Monday.
The Saudi company, through its Netherlands-based subsidiary Midad Energy North Africa BV, agreed to shoulder the full exploration and development cost. That is expected to be $5.4 billion, including $288 million for exploration, Sonatrach said in a statement on its website.
The PSC is expected to produce, according to Sonatrach, a total of 993 million barrels of oil equivalent consisting of 125 billion cubic meters (4.41 trillion cubic feet) of gas for marketing and 204 million barrels of liquids, including 103 million barrels of liquefied petroleum gas and 101 million barrels of condensate.
The contract lasts 30 years, including seven years for exploration, Sonatrach said. The contract is extendable by 10 years, it said.
“This program includes also the use of the latest technological and digital solutions”, Sonatrach said.
“Furthermore, calling on local content and subcontracting with national supplier under the execution of this contract will be prioritized”.
Sonatrach chair and chief executive Rachid Hachichi and Midad Energy North Africa counterpart Sheikh Abdulelah Bin Mohammed Bin Abdullah Al-Aiban signed the PSC in the presence of Algerian Hydrocarbons and Mines Minister Mohamed Arkab and Saudi Ambassador to Algeria Abdullah Bin Nasser Abdullah Al-Busairi, according to Sonatrach.
On July 21 Sonatrach announced it has entered five hydrocarbon contracts under Algeria’s 2024 bidding round.
Ahara in Illizi province was signed with QatarEnergy and France’s TotalEnergies SE. Guern El Guessa II in the provinces of Bechar, Beni Abbes, El Bayadh and Timimoun was signed with China Petroleum and Chemical Corp (Sinopec). Toual II in the provinces of Ouargla and Illizi was signed with Austria’s Zangas Hoch- und Tiefbau GmbH and Switzerland’s Filada AG. Zerafa II in the provinces of Adrar, El Menia, In Salah and Timimoun was signed with China’s Zhongman Petroleum and Natural Gas Group Corp Ltd. Reggane II in Adrar province was signed with Italy’s Eni SpA and Thailand’s PTT Exploration and Production Public Co Ltd.
“With a duration of 30 years, including seven years dedicated to exploration activities, these contracts provide for the implementation of an exploration program involving a minimum investment of $606 million”, Sonatrach said.
“[T]he Algeria Bid Round 2024 is the first call for investment competition launched by ALNAFT [National Agency for the Valorization of Hydrocarbon Resources] under Hydrocarbons Law No19-13”, it noted.
“These results demonstrate investor confidence in the potential of the Algerian mining sector and confirm the attractiveness of Law No19-13 on hydrocarbon activities”, Sonatrach added.
Earlier this year Sonatrach announced two other exploration and production contracts, signed with Eni and Sinopec.
On July 7 Sonatrach announced a contract with Eni for Zemoul El Kbar in the Berkine Basin some 300 kilometers southeast of Hassi Messaoud, Ouargla.
The license, covering 4,200 square kilometers (1,621.63 square miles), lasts 30 years with an allowable extension of 10 years. Sonatrach expects an investment of $1.35 billion including $110 million for exploration.
The Zemoul El Kbar license includes neighboring assets previously under separate contracts, according to Eni.
“With this renewed framework, Eni and Sonatrach are further enhancing the value of the asset through a plan encompassing exploration and development operations, leveraging innovative technologies to optimize recovery rates and existing nearby facilities”, Eni said separately.
On February 25 Sonatrach announced a contract with Sinopec for Hassi Berkane North, 80 kilometers from Hassi Messaoud. Sonatrach expects an investment of $850 million.
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