Egypt and Algeria have dramatically deepened their energy partnership in a single diplomatic sweep, with Egypt’s state-owned engineering giant Petrojet signing a $1.1 billion contract to develop Phase Two of Algeria’s Hassi Bir Rkaiz oil field, while the two countries’ national oil corporations simultaneously sealed a Memorandum of Understanding covering Egypt’s purchase of Algerian crude oil — together representing one of the most comprehensive bilateral energy agreements between the two North African neighbours in decades.
The Petrojet contract, signed in the presence of Egyptian Petroleum Minister Karim Badawi and Algeria’s Minister of Hydrocarbons and Mines Mohamed Arkab, covers full engineering, procurement, construction, commissioning, and start-up works for Phase Two of the Hassi Bir Rkaiz development in the El Oued-Ouargla region — located approximately 130 kilometres east of Hassi Messaoud in southern Algeria. The scope includes the construction of a central processing plant with a daily capacity of 32,000 barrels, 217 kilometres of pipelines, gathering stations, and supporting infrastructure. Petrojet is leading the general contractor alliance in partnership with Italy’s Arkad, with the Hassi Bir Rkaiz consortium — comprising Sonatrach and Thailand’s PTTEP — having secured the licence through a global competitive tender. The field, where oil was first discovered in June 2022, currently produces 13,000 barrels per day; Phase Two is designed to more than double that capacity.
Badawi described Petrojet as one of Egypt’s key execution arms, with expertise enabling it to deliver major projects both domestically and internationally. He highlighted the company’s strong regional track record — spanning Algeria, Saudi Arabia, Iraq, Libya, Jordan, the UAE, and Kuwait — noting that the Hassi Bir Rkaiz award followed a highly competitive global tender, reflecting growing confidence in Egyptian engineering capabilities. More than half of Petrojet’s recent contracts have been secured outside Egypt, positioning the company as a regional engineering powerhouse diversifying into infrastructure, manufacturing, and new technologies.
The MoU between the Egyptian General Petroleum Corporation and Sonatrach establishes an institutional framework for Egypt’s procurement of Algerian crude oil, aimed at securing domestic market needs and enhancing the flexibility and sustainability of Egypt’s supply chain at a time when the country is managing a transition from net gas exporter to import dependence. Badawi said the agreement reflects the depth of the historic relationship between Egypt and Algeria and represents an important step toward regional integration in the petroleum sector.
The two sides also announced plans to establish a joint Algerian-Egyptian company for the localised manufacture of static equipment — including towers, pressure vessels, heat exchangers, air coolers, and separators — built to ASME international standards. The phased initiative is designed to meet Algerian domestic market needs and eventually expand exports to West Africa, turning the bilateral energy relationship into an industrial manufacturing partnership that generates lasting economic value beyond the immediate contract.
Source: Egypt Oil & Gas | AGBI