Algeria’s state-owned energy giant Sonatrach has announced a $2.33 billion project aimed at sustaining and potentially increasing natural gas production from the country’s largest and one of the world’s most significant gas fields, Hassi R’Mel.

The project, unveiled in late November 2024, is set to extend the life of this crucial energy asset, ensuring that Algeria continues to meet both domestic and international demand for gas.

In a statement, Sonatrach chief executive Rachid Hachichi said, “the just-launched project aims to offset natural depletion and keep production at 188 million cubic metres per day, which will be vital for maintaining supplies to Europe.”

This production level is deemed crucial for ensuring Algeria’s ability to meet its export commitments, particularly to Europe, which has become increasingly reliant on the North African nation for energy supplies amid the ongoing energy crisis triggered by Russia’s invasion of Ukraine.

The initiative involves several critical components, according to Hachichi, which include the construction of three state-of-the-art compression stations, designed to prevent the loss of production capacity due to declining pressure in the gas reservoir.

“These stations, equipped with 20 turbo-compressors, will help maintain the pressure needed to extract gas efficiently.
“The project also includes the upgrading of the field’s 300-kilometer gas gathering network, which connects production wells to central processing plants and export facilities.”
Rachid Hachichi, Sonatrach chief executive

In addition, Hachichi note that the project will install condensate processing modules, enabling Sonatrach to extract and process valuable by-products such as condensate and liquefied petroleum gas (LPG), which are key to maximizing the field’s economic output.

“It also includes simplifying certain elements of the infrastructure, which will improve operational efficiency and reduce maintenance costs over the field’s lifespan,” Hachichi added.

International Collaboration and Contractors

Rachid Hachichi, Sonatrach chief executive

In a notable display of international collaboration, Sonatrach partnered with two major global players in the energy sector — Baker Hughes and Tecnimont — to carry out the engineering, procurement, and construction (EPC) work for the upgrade.

Sonatrach Chairman Rachid Hachichi officially launched the project in the presence of the CEOs of both Baker Hughes and Tecnimont — Lorenzo Simonelli and Alessandro Bernini, respectively.

Their participation underscores the importance of the collaboration between Algeria’s state-owned energy company and its international partners.

A consortium formed by Baker Hughes and Tecnimont, assisted by Nuovo Pignone, was awarded the EPC contract in May 2024. The combined value of the contract is divided between the two companies, with Tecnimont taking the larger share of $1.7 billion and Baker Hughes contributing $600 million.

“Baker Hughes, a global leader in oilfield services and energy technologies, will provide expertise in compressor technology and related equipment, while Tecnimont, a subsidiary of the Maire Tecnimont Group, will handle the design and construction aspects of the project.”
Rachid Hachichi, Sonatrach chief executive

Together, the two “firms bring decades of experience in large-scale infrastructure projects in the energy sector,” Hachichi noted making them well-suited to deliver a project of this magnitude.

The Hassi R’Mel project’s implications extend far beyond Algeria’s domestic energy needs. As European countries seek to reduce their reliance on Russian energy imports, Algeria has emerged as an increasingly vital partner.

In addition to Hassi R’Mel, Sonatrach operates several other fields and export pipelines, but maintaining and expanding production at its largest field remains central to the country’s energy strategy.

With the full implementation of the Hassi R’Mel upgrade project slated for the next few years, Algeria is set to maintain its position as one of the leading natural gas exporters in the world.

For Sonatrach, the project represents a vital step in securing the long-term future of its most important asset and ensuring the continued strength of the Algerian economy in a rapidly changing global energy landscape.