Algeria's state-owned energy company Sonatrach said on Monday it signed a contract worth around $5.4 billion with Saudi Arabia's Midad Energy for oil and gas exploration and development in Algeria's Illizi Basin.

The production-sharing contract spans 30 years with an option to extend for an additional 10 years and includes a seven-year exploration period.

Midad Energy North Africa will fully fund the investment, including $288 million allocated to exploration. The Illizi South perimeter lies about 100 km (62 miles) south of the Algerian town of In Amenas, near the Libyan border.

The deal was first announced by Ennahar TV.

Overall production by the end of the contractual period is estimated to reach around 993 million barrels of oil equivalent, including 125 billion cubic meters of natural gas, Saudi state news agency SPA reported later on Monday.

Sonatrach is Algeria's largest oil and gas producer and has been actively seeking foreign partnerships to boost output and modernize infrastructure.

The company has previously signed deals with international partners, including a recent $850 million contract with China's Sinopec for hydrocarbon development and exploration.

Earlier this month, Algeria's energy minister said the country plans to invest $60 billion in its energy sector over the next five years, with a focus on upstream exploration and production.

The North African nation, a member of the Organization of the Petroleum Exporting Countries, aims to strengthen its role as a key supplier of energy to international markets while meeting domestic demand and making a transition to more sustainable sources.