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Sonatrach and ENI Seal $1.35 Billion Contract in Algeria

Sonatrach and ENI have signed a $1.35 billion production-sharing agreement aiming to extract 415 million barrels of hydrocarbons in Algeria's Berkine basin, strengthening energy ties between Algiers and Rome.

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The Algerian group Sonatrach and Italy’s Ente Nazionale Idrocarburi (ENI) have formalized a strategic production-sharing contract covering hydrocarbon exploration and production activities. The agreement, valued at approximately 1.35 billion U.S. dollars, concerns the Zemoul El Kbar area located in the Berkine basin, about 300 kilometers east of Algeria’s main oil hub, Hassi Messaoud. This agreement, initially valid for 30 years, includes a seven-year exploratory phase requiring a specific investment of 110 million dollars. Over the total duration of the contract, the two companies aim to recover 415 million barrels of oil equivalent (BOE), including around 9.3 billion cubic meters of natural gas.

A Strategic Area in the Berkine Basin

The Zemoul El Kbar area is part of the Berkine basin, one of Algeria’s most promising regions for oil and gas development. This zone is characterized by favorable geology and significant reserves, allowing Sonatrach and ENI to intensify their joint long-term investments. The contract includes an option for a ten-year extension beyond its initial 30-year term. The partners also plan to deploy advanced digital technology solutions to optimize extraction performance and increase well yields.

The collaboration between Sonatrach and ENI builds on a historical relationship dating back to 1981, when the Italian company began operations in Algeria. Both groups are notably responsible for jointly managing the TransMed pipeline, a critical infrastructure for transporting Algerian natural gas to Italy via Tunisia. This new agreement consolidates Algeria’s position as a major gas supplier to Europe, addressing Rome’s growing energy needs to reduce dependence on Russia, especially following the conflict in Ukraine.

Strategic Strengthening of Italo-Algerian Cooperation

Already in 2022, Algiers and Rome initiated a series of agreements aimed at reinforcing bilateral energy trade. Among these was a major hydrocarbons production agreement valued at 4 billion dollars. Italy is now actively seeking to diversify its gas supply sources, positioning Algeria among its top strategic partners. Claudio Descalzi, CEO of ENI, met with Algerian President Abdelmadjid Tebboune alongside this signing, underscoring the political significance attributed to this agreement by both nations. Sonatrach’s CEO, Rachid Hachichi, emphasized the technological and operational benefits anticipated from the planned investments.

The agreement between Sonatrach and ENI thus highlights the strategic importance of the energy sector in Algerian-Italian bilateral relations, within an international context marked by the need to secure reliable long-term energy flows. This new dynamic could have lasting impacts on the regional energy map, attracting interest from international players involved in hydrocarbon trading.

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