Oil and gas market in Algeria

Algeria is a major player in Africa and the Arab world in producing and exporting natural gas and crude oil. Every year, the country produces over 100 billion cubic metres of natural gas and around 1 million barrels of oil daily.

With an estimated 2,400 billion cubic metres of proven conventional natural gas reserves, Algeria ranks 10th globally and first in Africa. It also has the third largest untapped unconventional gas resources in the world.

Algeria has 12.2 billion barrels of proven oil reserves, ranking it 15th in the world and third in Africa.

Currently, all oil and gas reserves are located on land. However, Algeria is exploring new possibilities, including offshore and shale gas opportunities.

Key opportunities for Canadian oil and gas companies in Algeria

Algeria’s hydrocarbon sector offers numerous business opportunities for Canadian companies. With its vast natural resources, some of the least expensive energy in the world and its willingness to work with foreign partners, Algeria is a strategic market worth exploring.

Algeria turns to foreign companies specializing in construction, engineering, and procurement to develop its oil and gas projects. These companies work closely with Sonatrach, Algeria’s national oil and gas company.

To work with Sonatrach, companies must generally:

respond to tenders (open to everyone or by invitation)

routinely monitor posted tenders

Algeria actively seeks foreign technology and know-how in several areas, including:

seismic analysis and modelling
oil production optimization
advanced techniques for extracting more oil
drilling services (cementing, fluids, sludge processing)
water treatment
facility maintenance and repair
spare parts and specialized chemicals

Industry highlights

95% of Algeria’s export revenues come from the hydrocarbon sector. This sector accounts for over 50% of the country’s tax revenues and over 35% of GDP.

US $23.3 billion is the estimated amount to be invested in the hydrocarbon sector in 2025.

Approximately 139,000 people work in the hydrocarbon sector.

2% of global spending on oil and gas exploration in 2024 reportedly came from Algeria.

US$52 billion represents the total value of Algerian oil and gas exports in 2023.

Algeria relies on partnerships with international and domestic oil companies to address the declining production of its old fields and the growing demand from the local market.

Notable challenges for Canadian oil and gas companies in Algeria

Doing business in Algeria can be both promising and complex. The country has many strong points, but it also has challenges that can slow down foreign investment, such as:

a sometimes slow and complex bureaucracy
legal rules that can change quickly
limited access to financing

To succeed, it is essential to thoroughly understand the local environment and closely monitor on ongoing reforms. This is particularly important in the banking, customs, air transport, and foreign exchange sectors.

Algeria’s business landscape

Algeria has substantial oil and gas resources, which are entirely state-owned. Several key institutions manage this sector:

The Ministry of Energy, Mines and Renewable Energies (in French only): It sets the national strategy and oversees the sector’s development.
The National Agency for the Valorization of Hydrocarbon Resources: This agency manages exploration and production tenders and monitors oil projects.
The Hydrocarbon Regulatory Authority (in French only): It controls and regulates the sector’s activities.
Sonatrach (in French only): This national company covers the entire hydrocarbon value chain, from exploration to commercialization, and develops projects with foreign partners.

Exploration and production activities are governed by Law 19-13, while other investments are covered by Law18-22 on investment. The latter sets out investors’ rights and potential incentives.

Profits can be repatriated after taxes are paid and the origin of the funds is justified. Investors can transfer up to 100% of their earnings. However, such transfers are subject to strict regulations set by the Bank of Algeria, particularly regarding currency control, which can involve complex and sometimes lengthy administrative procedures.

Summary

Algeria offers numerous opportunities in the hydrocarbon sector. To take advantage of them, Canadian companies must be able to respond to tenders issued by the sector’s major players or act as subcontractors. 

For more information on the hydrocarbon sector in the Algerian market, please contact alger-td@international.gc.ca. 

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