Eni and Sonatrach Ink $1.35B Production Sharing Agreement
On 7 July 2025, Eni and Sonatrach signed a Production Sharing Agreement (PSA) worth USD 1.35 billion. This deal was sealed in accordance with Algeria’s amended Hydrocarbon Law and involves several oil and gas assets in a bid to ramp up production in southeastern Algeria. The partnership is mutually beneficial as it will enhance the #EnergySecurity of both Algeria and Italy in the face of geopolitical uncertainties.
Under the law, the state-owned enterprise Sonatrach will retain a statutory 51% controlling stake, while Eni will hold the remaining 49%. In addition, the proportion of production allotted to cost recovery is capped at 50% of the annual output to ensure that the Algerian state receives adequate revenues from day one. The JV will also pay a 10% royalty in kind or cash.
In particular, the assets are mostly in the Berkine Basin, located 300 kilometers of Hassi Messaoud. The PSA covers an area of roughly 4,200 square kilometers around Zemoul Ek Kbar (ZEK). The PSA expects to consolidate several smaller adjacent blocks.
The PSA has an operational lifecycle of 30 years, with an option to extend for an additional 10 years. It is planned that during the initial 7 seven years will be dedicated mostly on exploration. It is estimated that over the lifespan of the contract, some 415 barrels of oil equivalent (BOE) will be extracted, including 9.3 billion cubic meters of natural gas. After satisfying domestic demand, the excess natural gas will be exported to the EU via Italy through the TransMed Pipeline.
Out of the $1.35B in investment, $110M is ring-fenced for geological exploration and upstream research. The Agreement explicitly dictates local content to prioritize local suppliers and service providers. Additionally, the PSA incorporates a three-year training program for local capacity building.
Last February 2025, Sonatrach signed an $850M PSA with Sinopec for the Hassi Berkan North field, located around 80 kilometers from Hassi Messaoud. Eni plans to inject up to $9B in Algeria over the next few years to develop energy production.