Algeria Nears Agreement with Exxon and Chevron on Shale Gas Exploration

Algeria is progressing towards finalizing agreements with U.S. oil giants Exxon and Chevron to explore and invest in its substantial shale gas resources. This strategic move reflects Algeria’s ambition to enhance its natural gas pipeline and liquefied natural gas (LNG) exports. According to Samir Bekhti, chairman of the Algerian energy regulator Alnaft, the technical aspects of the negotiations have largely been settled, while commercial terms are currently under discussion.

Bekhti emphasized the significance of attracting major players like Exxon and Chevron, suggesting that such partnerships would send “a strong signal” regarding Algeria’s resource potential. The exploration of shale gas would represent a new frontier for Algeria, a member of OPEC, as the country seeks to increase its production and maintain its role as a key gas supplier to Europe.

Algeria boasts substantial conventional natural gas reserves and is estimated to possess the third-largest shale gas reserves globally, trailing only China and Argentina. This exploration initiative aligns with the growing demand for natural gas in Europe, particularly as the continent diversifies its energy sources in response to reduced supplies from Russia following the invasion of Ukraine.

Strategic Partnerships and European Energy Needs

In a statement to Bloomberg, Chevron expressed enthusiasm about the potential synergies and relationships that could develop in Algeria, leveraging the company’s extensive operational experience. The urgency for increased gas supplies to Europe has led several energy companies to explore new partnerships in Africa, with Algeria emerging as a pivotal player.

Most of Algeria’s gas exports currently reach Europe, which increasingly looks to Africa to fill the gap left by diminished Russian pipeline gas supplies. Notably, Italy’s energy major Eni has been proactive in securing additional natural gas supplies for Europe and has accelerated projects across Africa to meet rising demand.

In addition, the UK’s Grain LNG terminal, the largest liquefied natural gas terminal in Europe, recently signed a ten-year agreement to extend the long-term storage and redelivery capacity of Algerian energy firm Sonatrach at the terminal starting in January 2029. This agreement underscores the strategic importance of Algerian gas in meeting European energy needs.

As Algeria moves closer to solidifying its agreements with Exxon and Chevron, the outcome could have significant implications for the global energy landscape, particularly in light of Europe’s urgent quest for alternative gas supplies.