Rajan Wilcox
Algeria is one of the world's top ten natural gas producers, exporting to several European countries. In 2023, the country's natural gas production was 136 billion cubic meters, up from 132.7 billion cubic meters the previous year. Algeria has been working to increase its oil and gas production and exploration, signing deals with major US companies, including ExxonMobil, to develop its energy sector. ExxonMobil has been in talks with Algeria's national oil company, Sonatrach, to explore oil and gas opportunities in the North African country. While the details of the deal have not been disclosed, the collaboration between the two companies is expected to boost Algeria's energy sector and provide an alternative to Russian gas in the European market.
| Characteristics | Values |
|---|---|
| ExxonMobil's interest in Algeria | To begin exploration and production (E&P) opportunities in the country |
| Algeria's natural gas production | 136 billion cubic meters in 2023, up from 132.7 the previous year |
| Algeria's exports | 52.4 billion cubic meters of gas in 2023, compared to 49.3 in 2022 |
| Algeria's oil production | 1 million barrels per day |
| Algeria's gas production | 106 billion cubic meters per year |
| ExxonMobil's rank | Zacks Rank #3 (Hold) |
| Algeria's position as a gas supplier | Among the top 10 biggest producers of natural gas in the world |
| Europe's demand for Algerian gas | Increased due to the war in Ukraine, with Italy, Spain, and Germany signing deals to boost purchases |
| Algeria's dependence on oil and gas earnings | Provides 60% of the state budget |
| Sonatrach's performance | Key to the health of Algeria's economy |
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What You'll Learn
ExxonMobil to explore E&P opportunities in Algeria
In January 2024, ExxonMobil announced that it was in talks with Algeria's national state-owned oil company Sonatrach to explore oil and gas opportunities in the North African country. Algeria is among the top ten producers of natural gas globally and is seeking to further develop its energy sector to meet rising European demand in the wake of the Ukraine war.
Algeria's oil production is around one million barrels per day, and its gas production is 106 billion cubic meters per year, according to figures released by Sonatrach. The country is actively seeking to attract American companies to invest in its energy sector, and it has already signed a deal with Occidental Petroleum.
ExxonMobil's discussions with Sonatrach focused on exploration and production (E&P) opportunities in Algeria. The deal was expected to be finalized in the coming days, according to Algerian Energy Minister Mohamed Arkab. However, an Exxon spokesperson declined to comment on the details of the company's commercial strategy.
The collaboration between ExxonMobil and Sonatrach is expected to boost Algeria's oil and gas output and strengthen its position as an alternative energy supplier to Europe. Algeria has already signed several deals with European countries, including Germany and the United Kingdom, to increase its gas exports to the continent.
In addition to ExxonMobil's efforts, the US oil services company Baker Hughes was awarded a contract by Sonatrach in the Hassi R’Mel gas field, Algeria’s largest. This deal is part of a larger consortium that includes Baker Hughes and the Italian engineering firm Maire Tecnimont.
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Algeria's natural gas production increased in 2023
Algeria is one of the top ten producers of natural gas globally and is seeking to further develop its natural gas sector. In 2023, Algeria's natural gas production increased to 136 billion cubic meters, up from 132.7 billion cubic meters in 2022. This boost in production comes as Europe, traditionally a major recipient of Algerian LNG, seeks to reduce its dependence on Russian gas.
Algeria's exports of natural gas have increased from 49.3 billion cubic meters in 2022 to 52.4 billion cubic meters in 2023. In 2021, the country exported 53% of its natural gas, with Turkey being the largest recipient of Algeria's LNG, receiving more than 38% of its exports. France, Italy, and Spain accounted for nearly 50% of Algeria's liquified natural gas exports in 2021. In 2023, Algeria held an estimated 159 trillion cubic feet of proven natural gas reserves.
Algeria has been working to attract foreign investment to its energy sector and has signed deals with several international companies, including US oil giant ExxonMobil and Baker Hughes. These deals are expected to boost Algeria's energy sector and further position the country as an alternative gas supplier to Russia in the European market.
Algeria's state-owned oil and gas firm Sonatrach has been at the forefront of these efforts, signing memorandums of understanding and exploration deals with international companies. In 2024, Sonatrach confirmed it was in talks with ExxonMobil about oil and gas exploration opportunities in the North African country, with a deal expected to be reached soon.
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Algeria signs with ExxonMobil and Baker Hughes
Algeria has signed two hydrocarbon deals with US companies ExxonMobil and Baker Hughes, with the North African country's exports already on the rise. Europe is increasingly looking to Algeria for natural gas amid the Ukraine war, as it seeks to reduce its dependence on Moscow. Algeria is among the 10 biggest producers of natural gas globally and is keen to further develop the sector.
Algeria's state-owned oil and gas company, Sonatrach, signed a memorandum of understanding with ExxonMobil to develop hydrocarbon resources in the country's Ahnet and Gourara basins. The two entities will focus on technological innovation, sustainability practices, and the environment.
Sonatrach also awarded a contract to Baker Hughes, an American oil services company, for the Hassi R'Mel gas field, Africa's largest natural gas deposit. The deal is part of a broader agreement between Sonatrach and a consortium of Baker Hughes and the Italian engineering firm Maire Tecnimont. Baker Hughes will supply 20 compression trains to be installed at three stations in the field, increasing pressure so that natural gas can be transported through pipelines.
These deals are part of Algeria's plan to strengthen its position in the global energy market and enhance European energy security. Algeria has become a key exporter of gas to Europe, particularly Italy, since the start of the Ukraine war, and is expected to attract further foreign investment in its energy sector.
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Algeria pushes for foreign investment
Algeria has been pushing for foreign investment to boost its oil and gas output, with a particular focus on attracting US companies. In 2024, a total of 218 investment projects were registered, 82 of which were foreign direct investments (FDI). Algeria's economy is heavily reliant on hydrocarbon production, which has accounted for 95% of export revenues and approximately 40% of government income.
The Algerian government has implemented several measures to attract foreign investors, including the 2019 Hydrocarbon Law, which improved fiscal terms and contract flexibility, and the elimination of the "51/49" restriction that previously required Algerian majority ownership of new companies. The government actively encourages investment in multiple sectors, including agriculture, information and communications technology, mining, hydrocarbons, renewable energy, and healthcare.
Algeria's state-owned oil and gas firm, Sonatrach, has played a key role in attracting foreign investment. In 2024, Sonatrach signed a memorandum of understanding with US oil giant ExxonMobil to study the development of hydrocarbon resources in the Ahnet and Gourara basins, located in Algeria's vast desert. This deal is expected to boost Algeria's energy sector and position it as an alternative to Russian gas in the European market. Additionally, Sonatrach awarded a contract to US oil services company Baker Hughes for the Hassi R’Mel gas field, Algeria's largest.
Despite Algeria's efforts to attract foreign investment, economic operators face challenges such as complicated customs procedures, cumbersome bureaucracy, difficulties in monetary transfers, and price competition from international rivals. The frequent changes in laws and regulations are also a concern for foreign investors, as they increase commercial risk. However, with its strategic geographic location and abundant natural resources, Algeria remains an attractive prospect for long-term growth, particularly in the energy sector.
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ExxonMobil interested in working in Algeria
Algeria is one of the world's top ten producers of natural gas and is a major supplier to Europe, exporting 52.4 billion cubic meters of gas in 2023. The country has been seeking to further develop its gas sector to meet rising European demand in the wake of the Russian invasion of Ukraine.
In this context, the US oil and gas giant ExxonMobil has expressed interest in working in Algeria. In March 2018, the head of Algeria's state energy firm Sonatrach, Abdelmoumen Ould Kaddour, stated that "a big major Exxon Mobil has shown an interest to come to Algeria." Kaddour, a US-trained engineer, assumed office in 2017 to overhaul Sonatrach, which had been plagued by contract disputes with foreign firms, red tape, stagnant production, and corruption scandals.
ExxonMobil's interest in Algeria was further confirmed in January 2024, when the company announced its discussions with Sonatrach regarding oil and gas exploration opportunities in the North African country. The talks aimed to explore and produce (E&P) opportunities, with Algeria aiming to attract American investment in its energy sector.
In May 2024, Algeria signed two hydrocarbon deals with US companies, including ExxonMobil. The deal with ExxonMobil involves studying the development of hydrocarbon resources in Algeria's Ahnet and Gourara basins, focusing on technological innovation and sustainability practices.
These developments indicate a growing partnership between ExxonMobil and Algeria, with the potential for significant contributions to the country's natural gas production and exploration efforts.
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Frequently asked questions
Yes, ExxonMobil has shown interest in working in Algeria since 2018. In 2024, the company confirmed it was in talks with Algeria's national state-owned oil company Sonatrach about oil and gas exploration opportunities in the country.
As of May 2024, Algeria signed two hydrocarbon deals with US companies, including ExxonMobil. The deal with Sonatrach involves studying the development of hydrocarbon resources in Algeria's Ahnet and Gourara basins, focusing on technological innovation and sustainability practices.
Algeria is a leading gas supplier to Europe, and its proximity to the continent makes it an attractive alternative to Russian gas in the European market. Algeria's oil and gas sector has seen a rebound after Russia's invasion of Ukraine as it stepped in to provide alternative supplies.
The deal with ExxonMobil is expected to significantly increase Algeria's natural gas production. Algeria aims to raise production to 200 billion cubic meters (Bcm) per year in the short to medium term, up from 136-137 Bcm in 2023.
