Algeria’s state-owned energy giant Sonatrach has deepened efforts to position the country as a future supplier of green hydrogen to Europe after signing a cooperation agreement with German gas distributor VNG AG.
The memorandum of understanding was signed in Algiers by Sonatrach Chief Executive Officer Noureddine Daoudi and VNG AG Chief Executive Ulf Heitmüller, with both companies agreeing to explore cooperation in green hydrogen and other areas of mutual interest.
No specific project or investment value was announced, but the agreement builds on an initial partnership signed in December 2022 focused on developing opportunities in the emerging hydrogen sector.
The latest deal also includes cooperation on reducing methane emissions, as Algeria seeks to strengthen its role in Europe’s evolving energy transition.
The agreement forms part of Sonatrach’s wider strategy to develop partnerships with European companies and transform Algeria from a traditional gas supplier into a future clean energy exporter.
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In October 2024, Sonatrach signed similar agreements with several European firms to assess the feasibility of producing green hydrogen in Algeria and exporting it to markets including Germany, Italy and Austria.
The company has also partnered with Spanish energy group CEPSA on a separate green hydrogen initiative.
Algeria is already one of Europe’s largest natural gas suppliers, ranking behind only Russia and Norway. Existing pipeline links, including the Medgaz connection to Spain and the TransMed pipeline to Italy, could potentially support future exports of hydrogen or ammonia.
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The North African country is also exploring partnerships beyond Europe, including possible cooperation with Gulf investors as it seeks to expand its role in the global hydrogen market.
However, major economic and technical hurdles remain before large-scale green hydrogen exports become commercially viable.
A study by researchers from the Technical University of Munich, University of Oxford and ETH Zurich found that producing green hydrogen in Africa for export to Europe could be significantly more expensive than earlier estimates suggested.
The research examined more than 10,000 potential production sites across 31 African countries and found that only a small fraction would be economically competitive by 2030, even with government support mechanisms.
High costs linked to renewable power generation, electrolyser technology, transport infrastructure and export facilities remain among the biggest obstacles.
The slow pace of development reflects those challenges. Only a handful of African green hydrogen projects have reached final investment decisions, with limited commercial production currently underway.
For Sonatrach, the partnership with VNG represents another step toward a long-term ambition of becoming a player in the global hydrogen economy, but a clear timeline for commercial-scale production remains uncertain.
