The Algerian state-owned oil company Sonatrach and Saudi Arabia’s Midad Energy North Africa signed a production sharing agreement (PSA) on Monday to explore and exploit hydrocarbons in the Illizi Basin, located near the Libyan border in southeastern Algeria.
The 30-year agreement – with the option to extend for an additional ten years – covers the Illizi contractual area, situated around 100 kilometres south of the gas hub In Amenas, which lies close to Libya, according to Annahar newspaper and Asharq Bloomberg.
The deal includes an initial exploration phase of seven years and represents a total investment of USD 5.4 billion.
Under the new accord, the partnership aims to boost hydrocarbon output in a region strategically positioned between Algeria and Libya, two of North Africa’s key energy players. The Illizi Basin already contributes a significant share to Algeria’s gas production, with an estimated annual output of nine billion cubic metres, roughly one-tenth of the country’s total.
Energy analysts say the project’s proximity to Libya could open new opportunities for regional energy cooperation and cross-border infrastructure, particularly in the gas sector, as both countries seek to expand their export capacities towards Europe.
The In Amenas gas complex, part of the wider Illizi Basin, includes four onshore fields and extensive production and processing facilities. It is considered one of Algeria’s most important gas developments, playing a vital role in the country’s export strategy.
The deal reflects Algeria’s ongoing efforts to attract foreign investment into its energy sector amid growing global demand for natural gas. It also underscores Saudi Arabia’s expanding energy footprint in North Africa, positioning the Illizi project as a potential gateway for future cooperation with neighbouring Libya.
