Algeria signs oil and gas deal worth $5.4 billion with Saudi firm Midad Energy

Sonatrach, the state-owned energy firm of Algeria, announced on Monday that it had signed a $5.4 billion contract with Midad Energy from Saudi Arabia for exploration and development of oil and gas in Algeria's Illizi Basin.

The contract for production sharing is 30 years long with the option of an extra 10 years. It also includes a 7-year exploration phase.

Midad Energy North Africa is fully funding the investment, which includes $288 million for exploration. Illizi South is located about 100 km south of In Amenas in Algeria, close to the Libyan border.

Ennahar TV was the first to announce this deal.

Saudi state news agency SPA said that the total production at the end of the contract period will be around 993 millions barrels of oil-equivalent, which includes 125 billion cubic metres of natural gas.

Sonatrach, Algeria's biggest oil and gas producer, has actively sought foreign partnerships to increase output and modernize the infrastructure.

The company had previously signed contracts with international partners. One of these was a contract worth $850 million with Sinopec, a Chinese oil and gas exploration and development company.

Algeria's Energy Minister said earlier this month that the country will invest $60 billion over the next five-years in its energy sector, with an emphasis on upstream exploration.

As a member of the Organization of Petroleum Exporting Countries (OPEC), the North African nation aims to increase its energy supply to the international market while also meeting the domestic demand. (Reporting and writing by Jana Choukeir, Menna Alaa El Din; editing by Susan Fenton and Bill Berkrot).

(source: Reuters)