(Yicai) July 23 --  Zhongman Petroleum and Natural Gas Group said it has teamed up with Algerian state-owned oil firm Sonatrach to establish a joint venture to oversee the exploration and development of the Zerafa II natural gas block in Algeria, just over a month after the private Chinese oilfield services provider won the rights for the project.

The JV will be set up in accordance with a production sharing contract signed on July 21, Zhongman Petroleum announced late yesterday. The Shanghai-based firm will hold a 90 percent stake in the new company, with Sonatrach owning the rest.

Zhongman Petroleum won a bid from Algeria's National Agency for Hydrocarbon Resources Development to explore Zerafa II on June 18, with the contract having a 30-year term, which may be extended by 10 years if necessary. The project is located in central Algeria, covering over 38,697 square kilometers, and sits in the southern part of the Gourara-Timimoun basin, the country's main gas-bearing basin.

Zhongman Petroleum will handle all investments in the resource exploration phase of the project, while those in the development phase will be jointly borne with Sonatrach based on their share in the JV, the Chinese company pointed out.

After Zerafa II goes live, Zhongman Petroleum will recover its exploration investments according to the contract and distribute the production revenue with Sonatrach in proportion to the shareholding ratios, it added, without disclosing further details.

Zhongman Petroleum and third-party institutions have estimated the natural gas resources in Zerafa II's seven discovered oil and gas fields to be 109.26 billion cubic meters, according to the company.

Established as a drilling services provider, Zhongman Petroleum gradually shifted its focus to resource exploration and development. Its operating revenue from oil and gas exploration and development exceeded CNY2.3 billion (USD324 million) last year, accounting for over 56 percent of its total income, with overseas markets making up nearly 48 percent.

Zhongman Petroleum operates oil and gas resources in China and Kazakhstan and won the exploration and development rights for two blocks in Iraq last year. It produced a record high of 854,600 tons of crude oil in 2024, while its total oil and gas production reached just over 1 million tons of crude equivalent, also a record.

Shares of Zhongman Petroleum [SHA: 603619] closed down 0.2 percent at CNY19.43 (USD2.71) apiece today. The broader Shanghai Composite Index was slightly changed.

Editor: Martin Kadiev