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July 20, 2022

Sonatrach to invest $4bn to develop two onshore blocks in Algeria

Along with its partners, Sonatrach will look to develop and valorise associated gas resources to increase exports to European nations.

Algeria’s state oil company Sonatrach and its partners have jointly signed a production sharing contract (PSC) to invest $4bn in onshore blocks 404 and 208, located in the prolific Berkine basin in Eastern Algeria.

The partners include Occidental, France’s TotalEnergies, and Italy’s Eni.

The 25-year PSC is expected to result in the additional recovery of more than one billion barrels of oil equivalent of hydrocarbons from the two blocks.

Under the PSC agreement, which has been signed under Algeria’s new hydrocarbon law of 2019, the partners will carry out high density 3D seismic acquisitions, the drilling of 100 oil wells, and the conversion of 46 wells into WAG process wells.

The scope of work also includes the realisation of studies of master plans and installation optimisation, the implementation of digitalisation solutions for oilfields, implementing two enhanced oil recovery pilot projects, and undertaking environmental projects to help reduce the CO₂ footprint.

The partners will also assess the opportunity to develop and valorise associated gas resources to increase export potential for Europe, Eni said.

The contract forms part of the memorandum of understanding signed between Sonatrach and its partners in 2021.

TotalEnergies Middle East and North Africa exploration and production senior vice-president Laurent Vivier said: “This new contract on [the] Berkine asset, under the Algerian new Hydrocarbon Law, marks a new milestone in the strategic partnership with Sonatrach.

“This project is in line with the company’s strategy to develop low-cost oil while contributing to carbon reduction programs to minimise our carbon footprint.”

Earlier this year, Sonatrach revealed its $40bn five-year investment plan.

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