Chevron Corporation is reportedly in talks to secure an energy exploration agreement in Algeria, as the North African country seeks to replace its reliance on sanctioned Russian supplies in Europe. According to sources familiar with the matter, Chevron, the world’s second-largest Western oil company, is looking to utilize technologies developed in the US shale industry in Algeria. 

The company signed a memorandum of understanding with state-run company Sonatrach in 2020 to examine natural gas opportunities, but progress was slow until recently. Over the past decade, US companies have reduced their operations in oil-and-gas-rich Middle Eastern and African nations perceived as politically risky and have instead focused on thriving shale production in the US.

Chevron is exploring the possibility of energy exploration in Algeria, which holds more shale gas resources than the US, as the North African country looks to reduce its dependence on sanctioned Russian gas supplies in Europe. Over the past two months, Chevron has sent representatives to Algiers, the capital city, in areas of government relations, security, and business development, who have met with Algerian officials, according to sources familiar with the matter. The company has also hired consultants to evaluate Algeria’s shale and non-shale gas resources, its contractual terms, and to gain insight into its power structure.

Tapping into Middle Eastern and African natural gas reserves has become a priority for Chevron, following its recent discoveries of the resource in Egypt and Israel. The company, based in San Ramon, California, is hoping to leverage technologies developed in the US shale industry to develop similar reserves in Algeria. This move comes as other companies, such as Exxon Mobil, report a slowing of American shale production due to rising costs.

It has been reported that Algeria holds the third-largest recoverable shale resources globally, with 707 trillion cubic feet, according to the Energy Information Administration. This places it behind China and Argentina, but ahead of the US with its 623 trillion cubic feet.

A spokeswoman for Chevron declined to comment on specific business opportunities, but stated that the oil major has an agreement with the state agency to access data on the Ahnet, Gourara, and Berkine Basins, which are three of Algeria’s largest natural gas reservoirs. The spokeswoman added that Algeria has “a world-class petroleum system with significant potential for conventional and unconventional oil-and-gas exploration.”

European companies such as Eni, TotalEnergies, BP, and Royal Dutch Shell, among others, have formed agreements to develop natural gas throughout the Mediterranean region, including in Algeria, Libya, Egypt, Cyprus, and Lebanon. These companies are seeking to replace sanctioned supplies from Russia, which has traditionally been Europe’s largest gas supplier, and also to find a source of energy that is considered to be less polluting than oil and coal.

It has been noted that Chevron is a rare American company that is actively competing for natural gas in a terrain dominated by Europeans. According to Geoff Porter, the president of North Africa Risk Consulting, a US-based company that advises foreign investors in the region, Western companies are showing renewed interest in Algeria and other North African nations due to the rising demand for natural gas.

In mid-January, Chevron announced that it made a “significant” gas discovery in the East Mediterranean of Egypt, which the country believes could contain 3.5 trillion cubic feet of gas, which is larger than the reserves of countries like Colombia. Additionally, the company has gas resources off the coast of Cyprus and a stake in the Leviathan field in Israeli waters.

Chevron’s CEO, Mike Wirth, informed analysts at the company’s annual results in January that the region has a need for gas, both regionally in the Middle East and for options to get that gas into Europe.

Recently, U.S. companies have scaled back their global operations, with Chevron’s international output decreasing 3% last year due to the expiration of concessions in Thailand and Indonesia. Despite this trend, Chevron has unloaded assets in various places such as Azerbaijan, Denmark, the U.K., and Brazil since 2019.

However, last month, Chevron reported a 40,000 barrel per day increase in production in Venezuela after being granted a new license to pump oil there, following years of strict sanctions. The company is also reportedly in discussions to develop a 600,000-barrel-per-day field in Iraq.