A Production Sharing Contract (PSC) signed by majors Eni and TotalEnergies with Algerian state-owned national oil company SONATRACH and American exploration firm Oxy is expected to help the north African country to address some of the critical challenges hindering the growth of its hydrocarbons market.
While inadequate investments, declining production in legacy fields and energy transition-related policies are disrupting Algeria’s oil and gas industry, the PSC signed for onshore blocks 404 and 208 – which are located in the Berkine basin in eastern Algeria – will enable increased investments in exploration and production in the fields.
According to Eni, the deal will enable the four parties to increase hydrocarbons reserves in the blocks while extending production by an additional 25 years. New technologies including energy efficiency and decarbonization solutions aimed at reducing the carbon footprint incurred in the production of energy in the fields will also be applied as part of the deal.
With Europe increasingly looking at expanding energy ties with African hydrocarbon-producing countries to diversify oil and gas supply from Russia, Claudio Descalzi, the CEO of Eni said: “Through this new contract, additional volumes of gas will be made available for export and for the domestic market, coherent with Eni’s commitment to the energy transition. It also highlights the importance of the strategic partnership with SONATRACH, aimed at long term investments in Algeria to maximize asset value.”
The development follows Eni and SONATRACH signing a Memorandum of Understanding in late May for the two to expand collaboration on gas and green hydrogen development.