Last month, Ministers from Algeria, Tunisia, Germany, Austria and Italy formalized a declaration to develop the 3,300km Southern Hemisphere (SoutH2) Corridor green hydrogen project. The project aims to repurpose natural gas pipelines to transport green hydrogen from Algeria to European markets and is central to Algeria’s goal of supplying 10% of Europe’s green hydrogen demand by 2040.
This collaboration marks a significant step towards accelerating Algeria’s decarbonization strategy as well as Europe’s transition to clean energy. Alongside this, Algeria plans to inject nearly $50 billion into hydrocarbon projects over the next four years, 71% of which will be directed to exploration and production. This multi-faceted development strategy seeks to leverage all available resources in the country to boost energy production, increase exports and drive economic growth.
Revitalizing Oil & Gas Production
Central to Algeria’s vision to invest $50 billion into hydrocarbon projects, the country is offering six onshore blocks to international and domestic energy companies. The licensing round was opened last November, with the country’s National Agency for the Valorization of Hydrocarbon Resources having identified the M’Zaid, Ahara, Reggane II, Zerafa II, Toual and Kern El-Kassa blocks as sites for development. The blocks have been made available through production sharing contracts and participation agreements, representing a significant area for exploration and development.
The licensing round represents a pivotal moment in Algeria’s strategy to increase hydrocarbon production and boost foreign investment. By offering expansive acreage – approximately 152,000km2 – backed by high-quality seismic data, Algeria is positioning itself as a prime destination for energy investments and new exploration activity. As part of the five-year licensing strategy extending through 2029, the round underscores Algeria’s long-term vision for its hydrocarbon sector.
Algeria’s Roadmap for Modernization and Diversification
On top of the country’s strategy to boost hydrocarbon production, Algeria’s government has identified the energy sector as a strategic driver of socioeconomic growth, implementing a number of policies and mechanisms – such as the establishment of a new Ministry of Energy Transition – to drive foreign investment and diversify its energy mix.
Through its National Program for the Development of Renewable Energies, Algeria aims for a 30% renewable energy share – equating to 15 GW – by 2035. The country aims to leverage its immense solar potential to add 22 GW of renewable energy to the country’s energy mix by 2030.
Meanwhile, one of the most ambitious elements of Algeria’s diversification strategy is to become a global hub for hydrogen development. A recently-signed MoU between Algeria’s state-owned Sonatrach, Sonelgaz and a consortium of European partners – including VNG, Snam, Seacorridor and Verbund Green Hydrogen – highlights the county’s dedication to meeting growing global demand for low-carbon energy. The agreement not only reinforces Algeria’s connection with Europe, but also emphasizes the potential for green hydrogen to play a major role in the country’s future economy.
Expanding Energy Exports
Algeria’s hydrocarbon resources remain a vital pillar of its economy, with an estimated 159 trillion cubic feet of natural gas reserves and 12.2 billion barrels of crude oil. Two major gas pipelines – the Medgaz Pipeline to Spain and the Trans-Mediterranean Pipeline to Italy – solidify Algeria’s role as a primary supplier of natural gas to Europe. Recent agreements with European companies include partnerships between Sonatrach, energy supermajor Eni, exploration and production company Equinor and international oil company TotalEnergies to explore and develop gas resources in regions such as In Salah, In Amenas and Timimoun.
To capitalize on rising demand, Algeria plans to boost hydrocarbon production by 2.5% in 2025, targeting an output of approximately 26 million tons of oil equivalent. Between 2020 and 2024, gas sales surged by 25% in Algeria, while oil equivalent production rose by 3.5% compared to the previous year. These efforts underscore Algeria’s commitment to strengthening its position in the global energy market and driving economic growth through its vast natural resources
