Türkiye and Algeria will be establishing a joint oil and natural gas exploration company, Energy and Natural Resources Minister Fatih Dönmez announced on Thursday.
The new company will be engaged in oil and gas exploration activities primarily in Algeria as well as in countries around the region, Dönmez told Anadolu Agency (AA).
Dönmez said Türkiye and Algeria reached a consensus on the establishment of a joint company between Sonatrach, the national oil and gas company of Algeria, and Turkish Petroleum.
Tighter global energy markets and Europe’s attempts to wean itself off Russian gas following Moscow’s invasion of Ukraine have raised the demand for Algerian gas this year, helping the North African OPEC member turn the page on years of declining state revenues.
The announcement of the joint company came on the sidelines of Dönmez’s trip to attend the second Algerian Investment Conference as the guest of honor.
Dönmez discussed new bilateral steps in the fields of energy and mining with his Algerian counterpart, Minister of Energy and Mining Mohamed Arkab.
They both agreed to encourage and support the joint work and existing joint ventures between the two countries and the establishment of the new company.
Last year, Algeria and Türkiye embarked on a joint project in the petrochemical field, in which a petrochemical factory was founded in the southern Turkish city of Adana.
The project was initiated in October 2021 with the partnership of Rönesans Holding from Türkiye and Sonatrach.
The project is estimated to cost $1.4 billion, with Rönesans Holding owning a 66% stake and Sonatrach 34%. The project aims to produce polypropylene plastic used in several industries, including cars and textiles.
Algeria is one of Türkiye’s top energy sources. Around 90% of Algeria’s exports to Türkiye consist of energy materials, including liquefied natural gas (LNG), liquefied petroleum gas (LPG), crude oil and natural gas.
Algeria’s role as a gas supplier for Italy, Spain and other Southern European countries has heightened significance this year due to the conflict in Ukraine and Europe’s imposition of sanctions against Moscow.
The country has also been approached by Eastern European countries seeking new sources of gas.
Algerian supplies account for more than a quarter of gas demand in both Spain and Italy and Sonatrach is the third-biggest exporter to Europe after Russia and Norway.
The trade volume between Türkiye and Algeria, which was around $4 billion last year, is expected to expand to some $5 billion by the end of the year, Dönmez said.
Based on a presidential decree issued in May during Algerian President Abdelmadjid Tebboune’s visit to Türkiye, the two countries target a further expansion to $10 billion as soon as possible, Dönmez said.
Tebboune’s trip to Türkiye marked the first presidential visit in 17 years since the one in 2005 by the late Abdelaziz Bouteflika.
The visit was marked by multiple new agreements aimed at further expanding their bilateral relations and strengthening cooperation, with a particular focus on the energy and defense industry.
Dönmez also met with Tebboune to discuss increasing trade ties. Approximately 1,500 Turkish companies operate in Algeria, and the minister said that there is greater potential for growth.
“There have already been investments of many Turkish companies here (Algeria) for quite a long time. About 1,500 companies are investing here and about 30,000 Algerians are working in these companies,” he said.
“Joint works are being carried out not only in economic areas, but also in cultural and political areas, and especially in the defense industry. We will continue our work uninterruptedly in line with this vision put forward by both leaders,” Dönmez added.
