Italy expands Algerian gas assets through a 30-year, $1.3 billion production deal
In a significant move that strengthens international energy partnerships and diversifies the European Union's (EU) gas supply, Algeria and Turkey have agreed to a $1.35 billion production-sharing deal to explore and develop natural gas reserves in southeastern Algeria.
The joint venture, which marks Turkey's first European energy venture, is expected to yield up to 415 million barrels of oil equivalent, including 9.3 billion cubic meters of natural gas, over the full contractual period. This development underscores Algeria's critical role in the EU's natural gas supply chain, particularly as the EU continues to diversify away from Russian energy dependence.
Italy will contribute $1.01 billion towards the investment, while Algeria will provide $337 million. The exploration and development work will take place approximately 300 kilometers east of Hassi Messaoud.
The agreement outlines a 30-year framework for the exploration and exploitation of hydrocarbons in the Zemoul el Kbar field, located in the Berkine Basin. Rachid Hachichi, CEO of Sonatrach, described the project as a "qualitative step" in Sonatrach's development strategy.
Algeria's significance to the EU's gas supply is evident in the data from Q1 2025. The EU imported €95.3 billion worth of energy products, including a notable increase in imports of liquefied natural gas (LNG) by 12.1% in volume, and a 19% increase in value for natural gas in gaseous state, despite a 12.1% volume decrease overall. Algeria, while mainly supplying gaseous natural gas, remains a key partner in the EU's strategy to diversify its energy sources and reduce dependency on Russian gas.
In fact, Algeria accounts for 19.4% of the EU's natural gas imports in a gaseous state, making it the second-largest supplier behind Norway, which accounts for 52.6%, and ahead of Russia at 11.1%. In 2024, European Union countries imported 39.19 billion cubic meters of natural gas from Algeria.
Eni, an Italian energy company, considers Sonatrach as one of the world's leading partners in international energy investment. Eni has been active in Algeria since 1981 and co-manages the TransMed pipeline with Sonatrach, delivering Algerian gas to Italy via Tunisia. Claudio Descalzi, CEO of Eni, emphasizes the depth of bilateral cooperation between Algeria and Italy.
Algeria remains the largest exporter of natural gas in Africa and ranks as the seventh largest global natural gas exporter. This strategic partnership between Algeria and Turkey is set to further bolster Algeria's position as a key player in the global energy market.
However, the potential impact on natural gas flow at the shared border between Turkey and Algeria remains unclear. The agreement was signed at Sonatrach's headquarters in Hydra, Algiers, with $110 million dedicated to exploration, while the remaining $1.24 billion will be used for field development.
As the world navigates the complexities of energy politics and the quest for sustainable energy sources, partnerships such as this one between Algeria and Turkey are poised to play a significant role in shaping the future of global energy supply.
[1] European Council, "Algeria: The EU's Second Largest Supplier of Natural Gas in a Gaseous State," [website], [date]. [2] European Commission, "EU Energy Statistics," [website], [date]. [3] Eurostat, "EU Energy Imports by Country and Fuel," [website], [date]. [4] Algerian Ministry of Energy Transition and Sustainable Development, "Algeria's Natural Gas Exports in 2024," [website], [date].
- The European Union (EU) may increasingly collaborate with Turkiye in the energy sector, given the recent strategic partnership established between the EU member Italy and Algeria for natural gas exploration and development.
- As a result of this business deal, it might be possible for the EU to enhance its energy diversification efforts, potentially diminishing its reliance on gas from Russia and other traditional suppliers.
- Given Algeria's prominent position as a significant global player in the natural gas industry, this partnership with Turkiye could bolster the country's economy and financial stability, enabling it to further expand its influence in both European and international energy markets.
