Algeria's Sonatrach strikes production deal with TotalEnergies, Occidental and Eni

New production-sharing contract is for 25 years for onshore blocks in eastern part of North African country

The headquarters of state energy company Sonatrach in Algiers. Reuters

Algeria's state-owned oil company Sonatrach has agreed with French oil major TotalEnergies, Occidental and Italy's Eni to the extension of a production-sharing contract for a period of 25 years for onshore blocks in the eastern part of the North African country.

The contract for Blocks 404a and 208 in the Berkine basin, signed under the 2019 Algerian Hydrocarbon Law, will allow for the development of additional liquid hydrocarbon resources, while reducing carbon intensity in these fields through a dedicated carbon reduction programme, TotalEnergies said in a statement on Tuesday.

"The opportunity to develop and valorise associated gas resources will be studied by the partners, thus increasing export potential towards Europe," the company said.

The four companies will invest $4 billion in the perimeter of Berkine to produce 1 billion of oil equivalent barrels, Reuters reported, citing Sonatrach chief executive Tewfik Hakkar.

“This new contract ... marks a new milestone in the strategic partnership with Sonatrach”, said Laurent Vivier, senior vice president for exploration and production at TotalEnergies in the Middle East and North Africa. "This project is in line with the company’s strategy to develop low-cost oil, while contributing to carbon reduction programmes to minimise our carbon footprint."

Algeria is Africa's biggest gas exporter and supplies about 11 per cent of the natural gas consumed in Europe.

TotalEnergies is active in oil and gas exploration and production in Algeria, as well as in liquefied natural gas through supply contracts with Sonatrach. It is also active in the marketing of lubricant and bitumen.

TotalEnergies and Sonatrach have launched engineering studies for a petrochemical project in western Algeria.