Algeria is Africa’s largest natural gas producer and second largest oil producer after Nigeria. Algeria joined the Organization of the Petroleum Exporting Countries in 1969, after beginning oil production nine years earlier. Algeria is currently, like the Russian Federation, heavily reliant on its hydrocarbon sector, which accounted for almost 70 percent of government budget revenue and grants and about 98 percent of export earnings in 2011.

As reported by Oil Price with regards to 'Why Gazprom, why now?' - there is no significant exploration in Algeria has been carried out there for more than a decade, even as the country badly needs to develop new deposits to be able to fulfill its export commitments to Europe while meeting surging domestic needs. And actually, the contract is the result of eight years of negotiations.

According to the U.S. government’s Energy Information Administration, in recent years Algerian crude oil production has been stagnant even as natural gas production has gradually declined, because new production and infrastructure projects have repeatedly been delayed. Furthermore, in Algeria’s last three licensing rounds there has been limited interest from investors to undertake new oil and gas projects under the government's current terms, impelling Algeria’s Parliament recently to approve amendments to the current hydrocarbon law and introduce fiscal incentives to entice foreign companies to take on new ventures, particularly exploration in offshore areas and in areas onshore that contain shale resources.