Sun. Jun 23rd, 2024

Algeria Signs Gas Field Deal with Oil Giant ExxonMobil

Algeria’s state oil company announced Thursday it signed a memorandum with ExxonMobil to develop two gas fields, a move an analyst called “a big step” for the country’s energy ambitions.

The two companies plan to “study the existing opportunities to develop the hydrocarbon resources in the Ahnet basin and the Gourara basin” in southern Algeria, Sonatrach said in a statement.

The agreement was signed in Algiers by Sonatrach’s chief executive Rachid Hachichi and the head of exploration at ExxonMobil, John Ardill.

The companies did not give a figure for the scale of the investment or for the potential reserves in the two basins.

According to Geoff Porter, an energy expert and president of North Africa Risk Consulting, the agreement was “a big step for Sonatrach, which has not attracted new oil and gas companies to Algeria in several years”.

The preliminary agreement should lead to an exploration and production contract “if ExxonMobil is happy with the results”, Porter told AFP.

However, negotiations for such a deal could take 12-36 months, he added.

The agreement “opens up new development prospects for the Algerian mining sector and demonstrates the willingness of both companies to establish responsible and sustainable exploitation of natural resources”, Hachichi is quoted as saying in the statement.

Ardill said ExxonMobil would contribute its “cutting-edge capabilities” and said the agreement was a “first important step in creating a partnership that will further unlock the development potential of Algeria’s resources”.

In June 2023, The Wall Street Journal reported “advanced negotiations” between Sonatrach and both ExxonMobil and its fellow US oil giant Chevron, to exploit Algeria’s vast gas reserves.

The newspaper said there had been discussions of rights to exploit conventional gas fields as well as shale gas, which requires the environmentally controversial process of fracking to extract it from rocks.

The protocol signed on Thursday says that forthcoming studies would focus on “operational excellence, technological innovation and environmental respect”.

Porter said the agreement was “a very positive sign for Algeria” and its efforts to diversify foreign investments in its energy exploration sector.

The deal also “shows that (foreign) energy companies are seriously looking at Algeria’s potential as a guarantor of European energy security”, he added.

“Algeria is important to Europe, Algeria has gas reserves, and it is stable. The fact that ExxonMobil thinks that Algeria is a good investment destination will be a signal for other companies to consider investing in Algeria.”

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