Algeria's state-owned energy company Sonatrach has signed a memorandum of understanding with two members of the World Bank Group to work together on cutting gas flaring and methane emissions and developing green hydrogen.

The agreement was signed with the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC), the World Bank Group's lending and private-sector arms. It was announced on 6 November 2026, after a signing ceremony held on the sidelines of a workshop on climate finance and carbon markets in Algiers on 3 and 4 November.

Under the memorandum, the parties will identify and develop opportunities for cooperation on reducing greenhouse gas emissions from Sonatrach's operations, accelerating the energy transition through green hydrogen and its derivatives, and working together in the petrochemicals and fertiliser sectors. The deal also looks at ways to strengthen Sonatrach's international expertise, with a particular focus on African markets.

The cooperation covers technical assistance and the sharing of best practices, including techno-economic studies, assessments of financing options and skills development. Sonatrach will oversee the operational implementation of the agreement and coordinate the activities carried out under it.

A memorandum of understanding is a framework for cooperation rather than a binding investment contract, so the deal sets out areas for joint work instead of committing specific sums of money. Even so, it is a notable step for Sonatrach, one of Africa's largest energy producers, as it seeks to cut the climate impact of its gas operations while building a position in hydrogen, a fuel many governments see as part of the shift away from fossil fuels.

Gas flaring, the burning off of gas produced alongside oil, and methane leaks are among the oil and gas industry's largest sources of greenhouse gas emissions. Cutting them is widely regarded as one of the fastest and cheapest ways for producers to reduce their climate footprint, and Algeria has faced growing pressure from European buyers and climate campaigners to act.

The workshop at which the memorandum was signed, held at the International Conference Centre in Algiers, brought together officials and experts to discuss climate finance and carbon markets, an area Algeria is exploring as it looks for new sources of funding for its energy transition.

Sonatrach is central to Algeria's economy, accounting for the bulk of the country's export earnings through oil and gas sales. Any move by the company towards cleaner production and hydrogen is therefore likely to be watched closely by Algeria's trading partners in Europe, which buy large volumes of Algerian gas, and by other African producers weighing similar steps.

No timetable for specific projects under the memorandum has been published, and neither side has announced funding figures. Further details are expected as the technical studies and financing assessments set out in the agreement get under way.