Italian energy company ENI and Algerian Sonatrach signed a memorandum of understanding (MoU) to expand their collaboration in upstream activities, ENI announced in a statement on Thursday.
The agreement was inked during a meeting with Algerian Energy Minister Abdelmadjid Attar, Sonatrach's CEO Toufik Hakkar and Eni's CEO Claudio Descalzi.
Algeria has made efforts to attract investments in the upstream sector and in January introduced a new hydrocarbon law to improve contract terms and tax levels.
Based on the new hydrocarbon law, the agreement covers joint work aimed at identifying exploration, development and production opportunities.
Under the new legislation, the tax burden on state-owned Sonatrach and its international partners will be cut from 85% to around 60%-65%, Toufik Hakkar, head of the working group responsible for the law, said in an interview with state news agency APS in January.
The agreement also aims at extending the fast track development model successfully applied to the gas pipeline project, the Berkine Nord, connecting Bir Rebaa Nord (BRN) and Menzel Ledjmet Est (MLE) fields in the Berkine Basin, in the southeastern part of Algeria.
The pipeline is 185 km long and has a transport capacity of 7 million standard cubic meters of gas per day.
The two companies confirmed their willingness to continue the acceleration of the Berkine Nord project, which entered into production last February, just one year after the signing of the agreements. They aim to export 6 million standard cubic meters (mscm) of gas per day by the end of 2020.
The parties also discussed the installation and management of plants for the production of solar energy in the production sites operated by Sonatrach and Eni.
“This meeting is a testament to the commitment of Sonatrach and Eni to expand their partnership in Algeria, furthering their shared strategy of accelerated development of the projects and pursuing the decarbonization objectives as part of our commitment to achieve long-term carbon neutrality by reducing and offsetting climate-altering gas emissions,” Descalzi was quoted as saying in the statement.
By Sibel Morrow