Algeria’s state oil company Sonatrach recently issued a major call for foreign bids on 24 oil and gas blocks across the Sahara, its largest licensing round in a decade. The move follows President Abdelmadjid Tebboune’s repeated calls to attract billions in fresh upstream investment as Algeria seeks to reverse declining production and retain its role as Europe’s third-largest gas supplier.
The blocks on offer include 14 in the prolific Berkine Basin, four in the Illizi Basin, three in the Ahnet Basin and three in the prolific Timimoun area. According to Sonatrach officials speaking to Reuters this week, the government expects to unlock at least $10 billion in new exploration and development spending over the next five years if just half the acreage is awarded.
For entrepreneurs and founders in Algeria and abroad, the licensing round presents both opportunities and cautionary signals. On the upside, Algeria is offering improved fiscal terms compared with previous rounds: signature bonuses are capped at $30 million per block, royalty rates start at 12.5 percent and the state will cover 50 percent of exploration costs up to $50 million per well. Sonatrach has also pledged faster approvals, with environmental permits and work programs to be processed within 120 days of submission.
“These terms are more competitive than the 2019 round,” said energy analyst Karim Ziani, who advises North African private equity funds. “The risk-reward balance has shifted in favor of operators willing to move quickly.” Ziani’s firm, Algiers-based North Africa Capital Partners, is evaluating two of the Berkine blocks for a consortium of European independents.
On the demand side, Sonatrach is targeting operators with proven track records in tight reservoirs and waterflooding—technologies Algeria lacks at scale. The best-positioned bidders are likely to be small to mid-cap independents from the United States, Norway and the United Kingdom that can drill appraisal wells within two years of award.
However, several entrepreneurs who have participated in past Algerian licensing rounds warn that execution risks remain high. Sonatrach has a reputation for lingering on joint-operating-agreement negotiations, and foreign exchange restrictions can delay profit repatriation. In 2025, a group of Italian independents filed arbitration against Sonatrach after the state company withheld $180 million in cost recovery for more than 18 months, according to documents seen by the Arab Weekly.
“Due diligence now must include legal vetting of currency clauses and force majeure definitions,” said Dalila Cherif, a senior partner at Algiers law firm Cherif & Partners. Her firm is helping two European independents structure offshore escrow accounts to mitigate payment delays.
The licensing round also arrives amid political turbulence. In March 2026, Algerian press reported that President Tebboune reshuffled the energy ministry and Sonatrach board, replacing Energy Minister Mohamed Arkab with former Sonatrach CEO Toufik Hakkar. Hakkar, who previously led Sonatrach’s upstream unit, has publicly pledged to streamline approvals and halve the time from discovery to first oil.
Independent analysts caution that the government’s commitment to reform will be tested by the IMF talks Algeria launched in 2025. Any new fiscal adjustments tied to an IMF program could alter the terms later this year.
For the Algerian diaspora, the licensing round offers a potential route to re-enter the energy sector. Several diaspora-led funds based in France, Canada and the UAE have approached Sonatrach in recent months seeking farm-in opportunities on under-explored blocks close to existing infrastructure. One such group, Algerian Energy Partners (AEP), is in exclusive talks for a 25 percent stake in a Timimoun gas discovery that Sonatrach appraised at 280 billion cubic feet in 2024.
“Diaspora capital can bridge the gap where international majors are hesitant,” said AEP co-founder Youssef Boussaid, who left Algeria in 2003. Boussaid is raising a €30 million fund targeting North African independents.
Yet diaspora investors must navigate the same legal and bureaucratic hurdles as foreign operators. In 2025, Sonatrach rejected several bids from Algerian-owned shell companies that lacked technical qualification, according to Sonatrach’s upstream directorate documents.
Key takeaway for entrepreneurs: Algeria’s 24-block licensing round offers improved fiscal terms and faster approvals, but execution risk remains high due to currency restrictions and past payment delays. Diaspora investors can participate but must meet technical qualifications and conduct thorough legal due diligence on contract terms.
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