Algeria’s Sonatrach, Italy’s Eni, the US-based Occidental and France’s Total signed a massive $4 billion oil and gas “production sharing” contract on Tuesday for a site in southeastern Algeria, covering a 25-year period to exploit oil and gas deposits in the Berkine basin.
In announcing Monday “this important agreement in the amount of four billion dollars”, the Algerian President, Abdelmadjid Tebboune had stressed, during a summit with the Italian Prime Minister, Mario Draghi, that it “will provide Italy with significant quantities of gas.
The agreement aims to recover “more than one billion barrels of oil equivalent of hydrocarbons, which will increase the average ultimate recovery rate to 55%,” Sonatrach said in a statement.
The goal is to “develop additional liquid hydrocarbon resources while reducing the carbon intensity of the fields through a targeted emissions reduction program,” Total noted in a separate release.
The agreement was signed under the terms of a new hydrocarbon law in Algeria, enacted in November 2019, introducing the possibility of production sharing with foreign groups.
This controversial legislation was met with fierce opposition in the country. Her detractors had demonstrated in the streets, claiming that she was selling off the national wealth to multinationals.
Occidental Petroleum is involved in this contract after absorbing the American oil company Anadarko. Total had signed an agreement with Occidental to buy Anadarko’s assets in Algeria, Ghana, Mozambique and South Africa.
However, the Algerian authorities opposed Total’s purchase of assets in the country, asserting their right of pre-emption.
During the Algerian-Italian summit, Algeria also announced an increase in its gas deliveries to Italy, which has become the leading supplier ahead of Russia, after the invasion of Ukraine.
In the next few days, some four billion m3 more will be exported to Italy, according to an Algerian government source.
An agreement to increase volumes delivered to Italy was announced by Mr. Draghi during a first visit to Algiers in April, but no figures were provided.
Since the beginning of 2022, Algeria has supplied Italy with 13.9 billion m3, exceeding by 113% the volumes initially planned.