Sonatrach, the Algerian national energy company and LNG producer, said it signed an agreement worth US$490 million with Chinese major Sinopec in the form of a production sharing contract for the Zarzaitine block in the Illizi basin of eastern Algeria.
Sonatrach said the 25-year contract was signed on May 28 by the vice-president of exploration and production at Sonatrach, Mohamed Slimani, and the general manager of Sinopec’s oil and gas unit, Wu Xiuli, in a ceremony held at the Sonatrach headquarters in Algiers.
Ceremony
The signing took place in the presence of the Algerian Minister of Energy and Mines, Mohamed Arkab, the representatives of the Chinese Ambassador to Algeria, Chen Zhong, as well as the Chief Executive of Sonatrach, Toufik Hakkar.
Programme
The Algerian agreement with Sinopec follows additional moves in the past month to improve and strengthen energy ties with Italy and Spain for pipeline natural gas supplies and with European Union nations in general as well as Turkey who receive most of Algeria’s LNG shipments.
The new Sonatrach-Sinopec agreement followed a previous accord to identify opportunities for joint investment in hydrocarbon exploration and production while integrating cooperation with China in the field of oil and gas and petrochemicals in Algeria.
“Within the framework of this contract, Sonatrach and its Chinese partner undertake to carry out a programme of development and exploration works in accordance with the approved development plan, the objective of which is the recovery and upgrading of hydrocarbons in the field of Zarzaitine,” explained Sonatrach.
“This work programme includes, in particular, the revamping of the Gas Lift Unit and the drilling of 12 new development wells,” it added.
“It additionally includes workovers for the replenishment of six existing wells, the connection of new development and maintenance of existing surface facilities, as well as the recovery of flared gas and the reduction of carbon emissions,” stated Sonatrach.
The Sinopec company has been present in Algeria since 2003 and operates with Sonatrach on the contractual perimeter of Zarzaitine, within the framework of a contract with the object of increasing the recovery rate of crude oil reserves.
The overall project is backed by a development plan seeking the recovery of nearly 95 million barrels of oil.
“The signing of this contract crowns the negotiations carried out within the framework of the memorandum of understanding signed between the two companies on May 20, 2021 and reflects the desire of the two parties to continue their historic partnership and to strengthen their cooperation in the production of hydrocarbons,” the statement concluded.
