Algeria has focused its exploration efforts in the south since oil and gas was discovered in the country in 1956.
Algeria holds the third-largest amount of proved crude oil reserves in Africa, all of which are onshore because there has been limited offshore exploration. According to Sonatrach, about two-thirds of Algeria’s territory remains largely underexplored or unexplored.
Algeria held an estimated 12.2 billion barrels (Bbbl) of proved crude oil reserves, a figure that has been unchanged for many years. Most proved oil reserves are in the country’s oldest and largest oil field, Hassi Messaoud, in the eastern part of the country, near the Libyan border. Hassi Messaoud is estimated to hold 3.9 billion barrels (Bbbl) of proved and probable recoverable reserves, followed by the Hassi R’Mel Field (3.7 Bbbl) and the Ourhoud Field (1.9 Bbbl). Currently, it produces 1.1 MMbbl/d, having slashed 50 Mbbl/d as per OPEC’s quota production cut.
Algeria’s oil and gas industry is lagging mainly due to the lack of major investment, though almost 95% of government revenue comes from oil and gas exports. Algeria requires cutting-edge technological solutions to improve oil recovery factors, which are low compared with neighboring countries in the Middle East. Currently, Algeria’s reservoirs, which require EOR techniques, have a recovery factor of less than 20%, compared with 34% in Egypt, according to Shaheen El-Sayed, vice chairman of production for Middle East and North Africa at IPR Egypt.
Sonatrach, Algeria’s state oil company, plans to invest over $50 billion in E&P projects in the country over the next five years, Salah Mekmouche, the company’s vice president for E&P, said earlier this year. The plan includes drilling more than 1,300 wells between 2017 and 2021 and reaching an annual production rate of nearly 230 million tonnes of oil equivalent. Algeria’s oil and gas production rate per year is currently at 190-200 million tonnes of oil equivalent on average.