Amid market pressures, Algeria is redefining its role in the energy sector through strategic initiatives and alliances. This month, Algeria’s national oil company Sonatrach signed a memorandum of understanding (MoU) with Egyptian technical services company Petrojet to explore the feasibility of establishing a joint venture in the country. The nation’s focus on increased gas output and exploring renewable energy options signifies a key turning point in its energy strategy. Algeria’s ambitious plans are poised to establish the country as a major energy player across Africa and beyond.
Oil and Gas
Algeria boasts oil and gas reserves of 12.2 billion barrels and 159 trillion cubic feet, respectively. Since the beginning of 2024, Sonatrach has announced the discovery of eight new hydrocarbon deposits. These discoveries are poised to bolster Algeria’s standing in the global energy market.
In June 2024, Sonatrach signed two MoUs to enhance collaboration in the oil and gas sector. The first, signed with Chinese petroleum refineries company Sinopec, aims to broaden their partnership into areas such as the exploration and development of complex reservoirs, renewable energy, oil engineering and skills development. Meanwhile, an MoU signed with multinational energy corporation Chevron aims to develop hydrocarbon resources in the Ahnet and Berkine basins, with a focus on operational efficiency, advanced technology and sustainability.
This year, Sonatrach has also signed MoUs with energy supermajors Eni, TotalEnergies and ExxonMobil to strengthen its partnerships with international players while exploring and developing new and mature oil and gas fields.
Green Hydrogen
Algeria aims to supply Europe with 10% of its green hydrogen needs by 2040. Sonatrach recently announced that it will sign an agreement with European energy companies in September 2024 – including Germany’s VNG, Italy’s SNAM and Sea Corridor and Austria’s Verbund – to study the feasibility of the transregional SoutH2 Corridor green hydrogen pipeline. The study will evaluate the potential for utilizing existing facilities and developing new infrastructure to transport four million tons of green hydrogen from Algeria to Europe annually.
Meanwhile, the governments of Algeria and Germany signed a declaration of intent in February to boost cooperation on green hydrogen development. As part of the partnership, the two countries will form a bilateral hydrogen working group.
Electricity Interconnection
State-owned Sonelgaz and Soantrach signed a MoU with Eni in July this year to study the feasibility of an electricity interconnection project between Algeria and Italy. The project will involve building a submarine cable to exchange or supply electricity to the European market.
Electricity will be generated from Algeria’s natural gas and renewable energy resources. The studies will assess technical, legal and financial market aspects to determine the viability of producing, transporting and commercializing renewable energy. Preparations for the project are currently underway and construction is expected to start soon.
Midstream Development
Sonatrach signed an agreement with Slovenian natural gas supplier Geoplin in May this year to boost gas exports to Slovenia. The deal aims to enhance energy cooperation between the two countries, thereby strengthening Algeria’s status as a global gas supplier. Meanwhile, last February, Sonatrach signed a medium-term contract with gas supplier VNG Handel & Vertrieb GmbH to supply pipeline natural gas to Germany. The agreement took place during a visit by a German delegation to Algiers earlier this year.
Renewable Energy
Despite the country’s reliance on hydrocarbon resources for power generation, Algeria aims to reach a renewable energy capacity of 15,000 MW and produce 27% of its electricity from renewable resources by 2035. The country currently generates approximately 686 MW – 3% of its energy mix – from renewable sources, which are primarily derived from solar (448 MW), hydro (228 MW) and wind (10 MW).
In July 2023, Sonelgaz revealed a list of bidders for a 2 GW solar tender. The selected bidders are poised to develop solar projects in 11 locations throughout the country with capacities ranging from between 80 MW and 220 MW.
