According to Oil and Gas Journal (OGJ), Algeria had 159 trillion cubic feet (Tcf) of proven natural gas reserves (the eighth-largest natural gas reserves in the world) as of January 2009. Algeria's largest gas field is Hassi R'Mel, discovered in 1956 and holding proven reserves of about 85 Tcf. Hassi R'Mel accounts for about a quarter of Algeria's total dry natural gas production. The remainder of Algeria's natural gas reserves come from associated (they occur alongside crude oil reserves) and non-associated fields in the south and southeast regions of the country.

The country produced 3.03 Tcf of dry natural gas in 2007, and is the sixth-largest natural gas producer in the world and the second largest among OPEC-member countries after Iran. Algeria consumed 0.93 Tcf of dry natural gas in 2007. The remaining natural gas is exported, much of it going to Europe and some to the United States. The Algerian government has encouraged the domestic use of natural gas, which represented 60 percent of the country's total energy consumption in 2007.

State-owned Sonatrach dominates natural gas production and wholesale distribution in Algeria, while state-owned Sonelgaz controls retail distribution. Algeria has increasingly allowed greater foreign investment in the sector, and foreign gas producers, including BHP-Billiton, BP, Eni, Repsol, Statoil and Total, have entered into numerous partnership agreements with Sonatrach. There are also plans to allow foreign participation in the retail natural gas sector.

Algeria's domestic pipeline system centers on the Hassi R'Mel natural gas field. The largest pipeline systems connect Hassi R'Mel to liquefied natural gas (LNG) export terminals along the Mediterranean Sea. A 315-mile, 4.38-billion-cubic-feet-per-day (Bcf/d) system connects Hassi R'Mel to Arzew, while a 360-mile, 1.98-Bcf/d system connects Hassi R'Mel to Skikda. A smaller pipeline (270 miles, 690 Mmcf/d) also runs between Hassi R'Mel and Isser, near Algiers. Hassi R'Mel is the hub of Algeria's entire natural gas transport network, so pipelines connect to it from the country's major natural gas-producing regions.

Algeria's dry natural gas exports totaled 2.10 Tcf in 2007, down slightly from 2.17 Tcf in 2006. Almost two-thirds of Algeria's total natural gas exports currently move through two natural gas pipeline connections operating between Algeria and Europe; the remaining one-third of total natural gas exports is exported in the form of LNG. The 670-mile, 2.32-Bcf/d Trans-Mediterranean (Transmed, also called Enrico Mattei) line runs from Hassi R'Mel, via Tunisia and Sicily, to mainland Italy. Completed in 1983 and doubled in 1994, there are plans to construct an additional compressor station along the Transmed that could increase capacity to 3.48-Bcf/d. An international consortium, led by Spain's Enagas, Morocco's SNPP, and Sonatrach, operates the 1,000-mile, 820-Mmcf/d Maghreb-Europe Gas pipeline (MEG, also called Pedro Duran Farell), completed in 1996, which connects Hassi R'mel via Morocco with Cordoba, Spain, where it ties into the Spanish and Portuguese natural gas transmission networks.

There are three new pipelines under construction or in planning:

The 120-mile Medgaz will link Beni Saf, Algeria to Almeria, Spain, with an eventual extension to France. The US$1.2 billion Medgaz is expected to be operating by September 2009, with an initial capacity of 390 Mmcf/d, increasing to 1.55 Bcf/d.

The 560-mile Galsi pipeline will run from Gassi R'Mel to El Kal, Algeria, underwater to Cagliari, Sardinia, overland to Olbia, Sardinia, and then underwater to Piombino, Italy, where it will be connected to the Italian national transfer network. The Galsi pipeline, currently under construction, will have initial capacity of 770-990 Mmcf/d and is expected to be completed by 2012.

Sonatrach and the Nigerian National Petroleum Corporation aim to construct a 2,800-mile natural gas pipeline from Warri, Nigeria to Hassi R'Mel, via Niger. The pipeline would utilize the proposed Medgaz and existing Transmed pipelines to carry Nigerian natural gas to European markets. In February 2009, it was reported that representatives of Sonatrach and the Nigerian National Petroleum Corp. (NNPC) met in Lagos and disclosed they were close to finalizing plans for the $12 billion project. However, the immense length and possible sabotage are two deterrent risks to the project moving forward.

Algeria's LNG exports currently make up about one-third of the country's total natural gas exports and are expected to increase in the mid-term, when the Skikda plant comes back online. About 898 Bcf of LNG was exported in 2007, compared with 844 Bcf in 2006. Most of Algeria's LNG exports go to Europe: about 729 Bcf in 2007 compared with 800 Bcf in 2006.

With the start-up of the Arzew GL4Z plant in 1964, Algeria became the world's first producer of liquefied natural gas (LNG). Algeria is the fourth largest exporter of LNG (behind Indonesia, Malaysia and Qatar), exporting around 11 percent of the world's total in 2006. Primary customers are France, Spain, and Turkey. Sonatrach has LNG export contracts with Gaz de France, Belgium's Distrigaz, Spain's Enagas, Turkey's Botas, Italy's Snam, and Greece's DEPA. In 2007, Algeria supplied 13 percent of OECD Europe's LNG imports. Also in 2007, Algeria exported 77 Bcf of LNG to the United States, some 10 percent of total U.S. LNG imports for that year. Algeria's largest LNG export terminal is the Arzew facility, whose three facilities combined produced an estimated 1,183 Bcf of re-gasified LNG in 2007. Other important terminals include Skikda and Algiers. However, the Skikda LNG plant is being rebuilt after an explosion in 2004 and is not expected to come back online until 2013.