Sonatrach and Wintershall Dea Sign Upstream MoU

The German firm is already active in Algeria's upstream as its operation dates back to 2002.
Publish Date
18th August 2020
Read Time
3 minutes

Wintershall Dea is the latest international producer to sign a memorandum of understanding (MoU) with the state-owned oil company of Algeria, Sonatrach, to open up for the joint exploration of the opportunities of the upstream sector in Algeria.

The memorandum covers the potential for exploration and production locally and internationally. The announcement was made known in a statement released by Sonatrach on 17th August 2020.

The German firm is already active in Algeria’s upstream as its operation dates back to 2002. It currently holds a stake in the major Reggane Nord gas project that commenced in 2017. The MoU is to last for two years, effective from July 1st 2020.

In a separate statement released by Winthershall Dea, the Chief Operating Officer of the firm, Dawn Summers said, “Wintershall Dea is well established in Algeria through our participation in the Reggane Nord project.”

“In 2020 we are evaluating a potential increase of activities in the country, and this MOU is an important step forward.”

“It will provide a framework for Wintershall Dea to identify and potentially access additional business opportunities in the country.”

This MoU reflects the commitment of the OPEC-member country to increase joint exploration with more international partners after the implementation of a new hydrocarbon law in January that allows a favourable tax policy for investors.

It has already inked several MoUs in the past months with several upstream companies including Chevron, ExxonMobil, Italy’s Eni, Spain’s Cepsa, Austria’s OMV, Turkey’s TPAO, and Russia’s Lukoil and Zarubezhneft. It has also held talks with other upstream companies like ConocoPhillips, Norway’s Equinor and Russia’s Gazprom Neft in its bid to attract back foreign investment back to the country.

In an interview with S&P Global Platts in May, the President of the National Agency for the Valorization and Promotion of Hydrocarbon Mining Domain (Alnaft), Noureddine Daoudi said the country will be holding bilateral talks and organise licensing rounds in the future to attract more foreign investment. He noted the new law offers upstream opportunities to new and exisiting partners.

He said, “It allows us to launch calls for tenders to promote potential E&P assets, while direct consultation is also another possibility enabling partnerships in exploration and field development.”

Officials of the Algerian government have said the provisions of the new law is a return to the 1986 hydrocarbon which led to remarkable discoveries in the 90s before the regulations changes in mid-2000s caused investment to reduce. The government hopes to woo more foreign investors to help to revive the country’s energy sector as soon as the pandemic is over.

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