Algeria and Turkey Deepen Energy Ties; LNG Agreement Extension Targeted
Image: Algerie Eco
Takeaway
The potential extension of the Algerian-Turkish LNG agreement signals a strategic move to solidify long-term energy partnerships. Energy companies with assets in Algeria, such as TotalEnergies and Eni, should monitor the evolving dynamics of Algerian gas exports to the Mediterranean region. Increased Algerian gas flows to Turkey may impact spot LNG prices and create opportunities for companies involved in pipeline infrastructure development.
Algerian President Abdelmadjid Tebboune concluded an official visit to Turkey on Friday, May 8, 2026, following meetings with Turkish President Recep Tayyip Erdogan in Ankara. The visit underscored the strengthening of fraternal relations and cooperation between the two countries. During the visit, Turkey's Energy Minister Alparslan Bayraktar announced Turkey's intention to extend its liquefied natural gas (LNG) agreement with Algeria, which is set to expire in September 2027. Bayraktar indicated that some of the gas could potentially be transported to Southeast Europe. A new memorandum of understanding was signed between the Algerian Investment Promotion Agency and the Turkish Investment and Finance Office to enhance economic cooperation and investment partnership.
Algeria has been a significant gas supplier to Turkey. In 2024, Algeria's natural gas exports to Turkey reached 5 billion cubic meters (bcm), a 15% increase compared to 4.35 bcm in 2023. This growth followed a period of relative stability, with exports hovering around 4 bcm between 2020 and 2022. The increased exports were facilitated by the completion of the Trans-Mediterranean Pipeline expansion in late 2023, which added 8 bcm of annual capacity. In 2022, Sonatrach and Botas signed a five-year deal to increase LNG deliveries, solidifying Algeria's role in Turkey's energy mix.
Algeria's total natural gas production in 2025 was 130 bcm, with 55 bcm allocated for domestic consumption and 75 bcm available for export via pipelines and LNG tankers. The country's proven natural gas reserves are estimated at 159 trillion cubic feet, ranking it among the top 10 globally. The Medgaz pipeline, with a capacity of 8 bcm per year, directly connects Algeria to Spain, while the Trans-Mediterranean Pipeline, with a capacity of 30 bcm per year, transports gas to Italy via Tunisia. Algeria also operates three LNG liquefaction plants with a combined capacity of 30 million tonnes per annum.
The extension of the LNG agreement would benefit both Sonatrach and Botas, ensuring a stable supply of gas to Turkey and providing Algeria with a reliable export market. European countries seeking to diversify their gas sources away from Russia could also benefit from increased Algerian gas supplies via Turkey. Companies involved in gas transportation and infrastructure, such as Medgaz and Eni, could see increased activity. However, countries that rely on Algeria for spot LNG cargoes may face tighter supply and potentially higher prices.
Looking ahead, the negotiations between Sonatrach and Botas regarding the terms of the LNG agreement extension are expected to conclude by the end of 2026. The potential for routing Algerian gas to Southeast Europe hinges on infrastructure developments in the region, including the completion of new pipelines and interconnectors. A key risk is the volatility of global LNG prices, which could impact the economic viability of the agreement. The Algerian government's upcoming energy strategy review in Q1 2027 will provide further clarity on its long-term export plans.