Occidental, Algeria Sign Oil Exploration Deal : Energy: The company will invest at least $32 million in prospecting in the North African country.

Algeria signed a five-year oil exploration contract Sunday with Los Angeles-based Occidental Petroleum Corp.

Under the contract, the company will invest at least $32 million in prospecting for oil in 8,800 square miles near Hassi R’Mel in the Sahara, the Algerian state oil company Sonatrach said in a statement.

The contract was signed while Algeria was under a state of siege after days of violent unrest involving Muslim fundamentalists demanding an Islamic state.

Under the agreement, Occidental pledged to sink 10 exploration wells and carry out detailed seismic surveys over a distance of 600 miles and other surveys extending beyond 3,000 miles.

Sonatrach, for its part, agreed to carry out gas exploration in the same area.

Sonatrach Director Abdelhak Bouhafs said during the signing ceremony that it was Algeria’s first exploration agreement with Occidental Petroleum.

“The choice of the blocs is also important. These blocs are sited in a prospecting zone close to existing oil facilities, which will help speed up the development of finds,” he said. Terms of the agreement were kept secret, but the Sonatrach director said production will be shared.

Occidental President David Martin said he was very happy with links with Sonatrach and was in a hurry to start work in Algeria in the next few months.

Since 1986, Algeria has sought to attract foreign companies to carry out exploration to increase its oil and gas reserves on which most of its wealth depends.

It has subsequently signed several exploration contacts covering 30,000 square miles, notably with Spanish, French and Italian companies and one other American firm, Anadarko, in 1989. Under those contracts, $500 million is being invested in 50 exploration wells.

Algerian oil production stood at 780,000 barrels per day late last year.