Algeria nears Chevron, ExxonMobil deals as country aims to boost oil and gas production, exploration

(Bloomberg) – Algeria is close to signing a deal with U.S. oil and gas giant Chevron Corp. as the OPEC member aims to increase natural gas exploration and production and remain a key supplier of the fuel to Europe.

State-run energy firm Sonatrach will ink the agreement to develop a large oil and gas field “within the next few days,” Energy Minister Mohamed Arkab said in an interview with state TV late Wednesday.

Before year-end, the country will also sign contracts with ExxonMobil Corp. to develop “very important fields that will make a very significant addition to the production of natural gas in Algeria,” he added.

Algeria’s oil and gas sector has seen a rebound after Russia’s invasion of Ukraine as it stepped in when Europe was struggling to find alternative supplies. Italy, Spain and Germany have signed deals to boost purchases from the North African nation that now accounts for about 14% of the European Union’s total imports of both pipeline gas and LNG, according to the bloc’s latest market data.

“Algeria played a role in securing Europe’s energy needs” Arkab said. “We will continue doing that as a reliable country in terms of commitments to long term contracts and the big volumes we supply to the European markets and also other markets in Asia in the form of LNG.”

Algeria has some of Africa’s largest oil and gas reserves, but production has long been held back by mismanagement and a lack of investment, until it made sweeping reforms in its hydrocarbons and investments laws from 2020.

Arkab said the new laws improved the investment climate in Algeria and helped the country clinch deals with giants such as Equinor, Eni and Occidental Petroleum.

Algeria is stepping up exploration efforts and has made eight large discoveries so far this year, with the aim of raising production to 200 Bcm a year in the short to medium term from 137 Bcm currently, he added.