Joint Ventures / Partnerships

Eni and Sonatrach Sign MoU for Further Upstream Collaboration in Algeria

By Mahati K L
July 03, 2020
2 minutes read
Shaking Hands

Italian energy major Eni SpA and Algerian state-owned Sonatrach SpA have signed a Memorandum of Understanding (MoU) to expand their collaboration in the upstream oil & gas sector in Algeria.

The MoU was signed on Wednesday in Algiers during a meeting between Abdelmadjid Attar, the Algerian Minister of Energy, and the CEOs of the two companies. It is in line with previous joint efforts between the companies and their transition towards a low-carbon future to ensure sustainable growth.

Under the terms of this agreement, the two companies will work together to identify exploration, development, and production opportunities based on Algeria’s new hydrocarbons law, which came into effect in late 2019 and aims at stimulating foreign investment in the country’s oil & gas sector. This legislation reduces taxes and local content requirements for Sonatrach’s international partners, while preserving the state-owned company’s 51% equity position in all upstream oil & gas contracts in the country.

The companies plan to extend the fast-track development model applied to the Berkine Nord project to future projects. They agreed to continue the acceleration of the Berkine Nord project, which commenced production in February with the aim of exporting 6 million standard cubic meters of gas per day (MMcm/d) by the end of 2020.

Eni and Sonatrach also discussed the installation and management of solar energy plants in the production sites operated by them, and agreed to immediately conduct feasibility studies for the expansion of the Bir Rebaa Nord photovoltaic system (built in 2018), and for the creation of a new photovoltaic system at the Menzel Ledjmet Est site, which will supply clean energy to the existing gas treatment plant.

In addition, agreements have been concluded for the upstream gas marketing of the North Berkine blocks and the commercial conditions of the gas import contract in Italy for the thermal year 2020-21.

“This meeting is a testament to the commitment of Sonatrach and Eni to expand their partnership in Algeria, furthering their shared strategy of accelerated development of the projects and pursuing the decarbonisation objectives as part of our commitment to achieve long-term carbon neutrality by reducing and offsetting climate-altering gas emissions,” said Claudio Descalzi, Eni’s CEO.

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