Chevron, ExxonMobil Near Agreement for Major Algerian Natural Gas Developments

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Algeria holds the world's third largest shale gas reserves--both total and technically recoverable, trailing only China and Argentina, and ahead of the U.S. The nation, in an effort to further boost its energy exports, which account for 75% of all, has been pursuing agreements with U.S. majors to develop its resources to make them available to world markets.

In a move that could reshape the world liquefied natural gas (LNG) balance in the future, Algeria is reporting that final agreements with Chevron Corporation (Houston, Texas) and Exxon Mobil Corporation (Spring, Texas) are almost complete. The nation has cited its proximity to the European Union (EU) as a positive in these negotiations.

A high percentage of its gas is already flowing to Europe via pipelines Medgaz and Transmed. But Algeria's conventional oil and gas and production is declining, and its National Agency for the Development of Hydrocarbons (ALNAFT) is seeking to reverse that curve by bringing the U.S.'s shale revolution to its own shores.

Developing Algeria's resources could significantly affect world markets and create competition for the recently signed agreement the Trump administration signed for the EU to take U.S. LNG. From the EU perspective, however, it could further give the bloc independence from the need for Russian supplies.

In May 2024, ExxonMobil signed a memorandum of understanding (MOU) with Algeria's state-run oil company, Sonatrach (Hydra, Algeria), to assess possibilities in southern Algeria's Ahnet and Gourara basins. Earlier in 2025, Chevron agreed with ALNAFT to explore develop offshore prospects, while leaving the door open for onshore agreements as well.

With these agreements approaching, the two U.S.-based supermajors are pleased with their own growth options. A Chevron statement proclaimed, "Algeria holds a world class petroleum system with the potential for significant oil and gas resources," and, "we are excited by the prospective synergies and relationship we could create in Algeria."

And ExxonMobil said, "Consistent with the HOA (heads of agreement) we signed in May 2024, we continue to work with Sonatrach to unlock Algeria's unconventional resources."

ALNAFT Chairman Samir Bekhti is also hopeful. "The technical aspects have more or less been agreed upon, but the commercial alignment is still under negotiation and will soon be finalized. He sees the agreement with the U.S.-based supermajors as sending a strong signal. Whether that means opening the door to other international investment remains to be seen.

Having observed the shale transformation in the U.S., Bekhti is clear on the necessity of investments of time and money to realize results. He said, "The United States did not reach this level of performance overnight. It took them no less than 15 years. For Algeria, it could take less time than that because the infrastructure, facilities and pipeline network are already in place."

Algiers' history of mismanagement that had hampered international investment was addressed in 2019 legislation, the Hydrocarbons Law, that offered more favorable fiscal terms and contract flexibility. It also streamlined contract agreements, reduced exploration and production taxes, and eliminated import duties on some types of oil-related equipment.

Shortly after that, the Russian invasion of Ukraine sent EU countries looking for alternatives to the Russian natural gas pipelines that had been their energy lifeline for decades. Algeria's long-known reserves, improved regulations and the sudden European demand would seem to constitute a perfect storm of new opportunities for the nation.

Challenges Abound
Shale development requires copious amounts of water for fracking, which is in short supply in the Sahara, and it also elicits environmental concerns. Plus, the southern fields of interest to ExxonMobil are a long way from export hubs on the nation's Mediterranean cost. Any drilling and production investment would have to be accompanied by midstream investment as well, at significant cost.

But the deep-pocketed ExxonMobil and Chevron do not appear to be intimidated by these investments, having worked through similar long-term issues in the Gulf of Mexico for decades.

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