Algeria: Leveraging Technologies to Drive Growth in the Oil & Gas Industry

April 19, 2025

By Choeib Boutamine
C.E.O, www.ranadrill.com

Introduction
Algeria is the largest producer and exporter of natural gas on the African continent, with a marketed production of 102 billion cubic meters (bcm) and roughly 51 bcm in exports. 65% of these exports flow through pipelines via Transmed to Italy and MedGaz to Spain, with Turkey being the largest importer of Algerian LNG, estimated at 4.45 bcm in 2024.

Challenges
Algeria aims to reach an annual production of 200 bcm by 2030. To achieve this target, $50 billion in investments have been allocated by the national oil company, Sonatrach, from 2024 to 2028. More than 70% of this budget is dedicated to the exploration and production of natural gas.

Conventional resources in Algeria are depleting rapidly, especially in significant reservoirs like Hassi Rmel (the biggest reservoir in Africa). In parallel, a promising project to enhance extraction from this field has been deployed and is currently running in collaboration with Baker Hughes, utilizing boosting stations to improve outputs of existing reserves, which have been declining over time.

Amid rising local consumption, especially during summer—when climate change has contributed to higher temperatures—Algeria faces increased demand for electricity. The country relies on natural gas for 98% of its electricity generation, meaning any surge in electricity demand is directly linked to natural gas consumption.

In order to preserve natural gas for the petrochemical sector, including fertilizers and exports, a project aimed at producing 15 GW of renewable energy was launched in 2024. This initiative seeks to reduce reliance on natural gas by 2035 and is expected to save billions of cubic meters of natural gas annually. Expanding this large-scale project by adding more gigawatts will certainly alleviate the rising demand for this vital source of energy in the local market.

The Role of U.S. Technology in Leveraging Algerian Resource Extraction
The U.S. is the world’s largest producer and exporter of LNG. In 2014, U.S. natural gas production was about 680 bcm, spiking by roughly 60% to reach 1,080 bcm by 2024.
This jump in production was not because of the investment in rig numbers. On the contrary, the natural gas rig count declined from 330 rigs in 2014 to 100 to date. But what was the secret of this optimization? Reducing the rig number to one-third while achieving a 60% increase in production?

Investments in Unconventional Resources
When oil prices plummeted in 2014, shale investors thrived to keep their investment flowing even in tough financial conditions; the result is that new methods and solutions have been deployed by sticking to technologies as the backbone to solve the pending challenges; extending the reach of horizontal drilling by investing in RSS drilling bits tailored to these new tools—reusing fracking water and chemicals—frac plug and perforation gun development—reducing the gap time between operations—using local products—increasing the rate of drilling rigs per area—spreading the uses of EOR.

These unconventional methods of extraction allowed the US to become a leader in natural gas production. This revolution has attracted the attention of many countries holding similar or larger reserves, including China, which produced 26 bcm of unconventional resources in 2024 (10.5% of its total natural gas production), and Argentina, which is mainly producing approximately 70% of its natural gas from shale (total production of natural gas in Argentina is almost 51 bcm annually).

Lesson learned:
Algeria holds the third biggest proven reserves of unconventional natural gas in the world (20 TCM) after China and Argentina and ahead of the US (17.5 TCM). Here we may shed light on this: deepening cooperation with the US to entice investments by bringing the technologies and innovations paving the way for the extraction of these resources, which are vital for the country’s development amid a global economic crisis where natural resources remain the locomotive for growth and renaissance.

The CEO of the National Oil Company Sonatrach is visiting the US, exploring strategic cooperation with US firms that have the expertise to extract unconventional resources, but they need to take into account one crucial point: the optimization of cost where the working conditions—geography— oil and gas industry specifications for each country—return on investments—and the environmental regulations must be applied to exploit these resources within a specific framework.

By Choeib Boutamine
C.E.O, www.ranadrill.com