Algeria’s Sonatrach, Italy’s Eni Sign $1.35bln Production Sharing Deal

Algeria’s state-owned energy company Sonatrach and Italy’s Eni have signed a 30-year production sharing agreement for the Zemoul El Kbar area, located in the Berkine Basin, according to statements issued by the two companies on Monday.

The contract, signed under Algeria’s new Hydrocarbon Law No. 19-13, includes an option for 10-year extension and a 7-year exploration phase.

Total planned investments are estimated at $1.35 billion, with $110 million allocated for exploration activities.

The project involves the development and exploration of an area of about 4,200 square kilometres (sq km) located approximately 300 km southeast of Hassi Messaoud and includes neighbouring assets previously under separate contracts.

It is expected to yield up to 415 million barrels of oil equivalent (boe), including 9.3 billion cubic meters of natural gas. The partners aim to optimise recovery through advanced technologies and the use of existing nearby facilities.

The contract also includes provisions to enhance local content, encouraging the subcontracting of national suppliers

A Heads of Agreement for the project was previously signed in May 2024, laying the groundwork for the current agreement.

In addition to the upstream contract, the two companies also signed a gas marketing agreement to define terms related to the export of dry gas from the Zemlet El Kbar.

This new agreement follows the recent award, in the context of 2024 Algeria Bid Round, of the Reggane II block to Eni in partnership with PTTEP.