Shell holds two production-sharing contracts in Algeria, in the Reggane Hirane block in the Reggane basin and in the Zerafa block in the Gouara basin. It is conducting exploration and appraisal campaigns in both blocks in partnership with the state-run firm Sonatrach.

Sonatrach currently owns a 25 per cent stake in the Reggane Hirane and Zerafa fields, with Shell holding a 60 per cent share and Mubadala's Liwa Energy the remaining 15 per cent stake. Shell, which had no presence in Algeria for almost 20 years, was awarded the five-year contracts in 2005 (MEED 15:4:05).

The agreement follows the signing of a strategic alliance in 2005 between Mubadala and Shell to develop joint ventures in the Middle East.

Mubadala has previously invested in a combined cycle power plant at Hadjret Ennous in Algeria as part of a joint venture agreement with Canada's SNC Lavalin (MEED 6:1:06).