Algeria Strikes $5.4 Billion Energy Pact With Saudi Partner to Revitalize Oil and Gas Sector

ALGIERS

Algeria has signed a $5.4 billion agreement with Saudi Arabia’s Midad Energy to explore and develop new oil and gas fields in the country’s southeast, part of an effort to revive foreign investment in its aging hydrocarbon sector.

The 30-year production-sharing deal, signed with Algeria’s state-owned energy firm Sonatrach, covers exploration blocks in the Illizi Basin, near the border with Libya. Midad Energy will finance the entire operation, including an initial $288 million exploration phase over the first seven years.

The partnership is among Algeria’s most significant energy accords in recent years and comes as the North African nation seeks to modernize infrastructure, expand exports, and secure long-term production capacity in a shifting global energy market.

A Strategic Bid for Investment

Algeria’s energy output — its economic backbone — has declined in recent years amid aging wells and limited foreign participation. The deal with Midad Energy is meant to reverse that trend and attract new capital from the Gulf, where investors are seeking reliable partners in gas and upstream production.

Energy Minister Mohamed Arkab described the partnership as a “strategic milestone” that will help Algeria boost output while transferring technology and expertise. “It reflects growing investor confidence in our energy sector,” he said during the signing ceremony.

The agreement allows for revenue sharing once production begins, with Sonatrach retaining a controlling stake. Officials say the collaboration could lead to further investments from Gulf partners as Algeria moves to diversify its energy portfolio.

Balancing Old Fuels With New Realities

The deal comes as Algeria positions itself as a key gas supplier to Europe, especially as the continent continues to seek alternatives to Russian energy imports. At the same time, the government is pushing to diversify its mix by investing in renewable sources and improving energy efficiency.

While critics argue that long-term oil and gas projects risk delaying Algeria’s transition to cleaner energy, the government maintains that natural gas remains crucial for both domestic stability and export revenues.

Part of a Broader Energy Ambition

Sonatrach has announced plans to invest $60 billion over the next five years to strengthen exploration, upgrade refineries, and expand LNG export capacity. Officials say the new Saudi partnership fits squarely within that agenda.

For Midad Energy, the agreement deepens its international footprint and underscores Saudi Arabia’s broader strategy of regional energy diplomacy, aligning state-backed firms with high-potential projects across North Africa.

Analysts say the Algeria–Saudi deal reflects a growing trend: oil producers partnering to maximize resources while preparing for a gradual global energy transition.