Algeria has launched a new round of oil and gas licensing rounds, aiming to reverse a decline in hydrocarbon exports that fell 8.2% in 2025 to 82 billion cubic metres of gas and 1.02 million barrels per day of crude, according to Sonatrach’s latest annual report. The state energy giant recently opened bids for 13 exploration blocks—10 onshore, three offshore—spread across the Berkine, Illizi, and Timimoun basins, as well as the deep-water Alboran zone. Bidding closes in December 2026, with awards expected in early 2027.
The urgency stems from a 12% drop in gas export revenues in 2025, down to $28.3 billion, despite higher European demand. The EU’s REPowerEU plan, which targets 50 billion cubic metres of annual gas imports from Algeria by 2030, has exposed bottlenecks: ageing pipelines, limited LNG capacity, and regulatory delays. Sonatrach’s CEO Rachid Hachichi acknowledged in a June 2026 press conference that “infrastructure constraints are now the primary obstacle to scaling exports,” citing the 8 bcm/year TransMed pipeline to Italy and the 10 bcm/year Maghreb-Europe line to Spain, both operating near full capacity.
To attract foreign capital, Algeria has sweetened terms. The 2025 Hydrocarbon Law amendments reduce state participation in new projects from 51% to 30% for offshore blocks and 40% for onshore, while offering 10-year tax holidays for deep-water exploration. The government also pledged to fast-track environmental approvals, cutting permitting times from 18 months to six. These changes follow a 2025 deal with Italy’s Eni and France’s TotalEnergies to develop the Bir Sebaa offshore field, which holds an estimated 3 trillion cubic feet of gas.
Yet investor caution persists. A July 2026 report by North Africa Risk Consulting (NARC) ranked Algeria 112th globally for contract enforceability, citing a 2024 arbitration case where a foreign operator spent 32 months contesting a $450 million tax reassessment. “The legal framework remains unpredictable,” said NARC’s Algeria analyst Karim Benamara. “Investors want guarantees that fiscal terms won’t change mid-project, as happened with the 2022 windfall tax.”
Algeria’s energy strategy extends beyond hydrocarbons. The Ministry of Energy Transition recently awarded contracts for 2 GW of solar projects to a consortium led by Algeria’s Cevital and Saudi Arabia’s ACWA Power, with financing from the African Development Bank. These plants, slated for completion by 2028, will supply industrial zones in Oran and Annaba, where electricity demand is growing at 7% annually. Sonatrach’s $2 billion green hydrogen pilot in Adrar, announced in May 2026, targets 50,000 tonnes of annual production by 2030, aiming to position Algeria as a future exporter to Europe.
For the Algerian diaspora, the licensing rounds present a rare opportunity. The 2025 Foreign Investment Law allows non-resident Algerians to invest in hydrocarbons without local partners, provided they commit at least $5 million. The Agence Nationale de Développement de l’Investissement (ANDI) has set up a “Diaspora Desk” in Paris, London, and Dubai to assist with permits and tax filings. “We’ve seen a 40% increase in inquiries from Algerians abroad since the law changed,” said ANDI’s director Samia Zouaoui. “Many are former engineers at Schlumberger or BP looking to return.”
Infrastructure remains the critical bottleneck. Sonatrach’s $1.2 billion expansion of the Skikda LNG terminal, due online in 2027, will add 4.5 million tonnes of annual capacity. The $3 billion Galsi pipeline to Sardinia, stalled since 2012, has been revived under a 2026 agreement with Italy’s Snam, with construction set to begin in 2027. These projects aim to double Algeria’s LNG export capacity to 30 million tonnes per year by 2030.
Key takeaway for entrepreneurs
Algeria’s gas sector offers high-margin opportunities for foreign and diaspora investors, but success hinges on navigating legal risks and infrastructure constraints. The 2025 Hydrocarbon Law’s tax incentives and reduced state participation make onshore and offshore blocks attractive, while the green energy push creates openings in solar and hydrogen. Entrepreneurs should prioritise partnerships with local firms like Sonatrach or Cevital to mitigate regulatory hurdles and leverage existing supply chains.
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