Customs is confident a massive haul of drugs uncovered in a shipment of New Zealand powdered milk sent to Algeria was not on board when it left the country.

Algerian authorities intercepted 165kg of drugs - believed to be cocaine or heroin - hidden in a container that was imported by ONIL, a nationally owned company that dominates the Algerian dairy market.

Agence France-Presse reports the massive haul is one of the largest ever intercepted in the North African country, according to a security official.

In a statement to NZ Newswire, Customs said it was unable to verify the reports but was working with Fonterra to establish the facts.

Customs' group manager of trade and marine, Paul Campbell, said there was no evidence the drugs were in the container when it left New Zealand.

It had passed through two other ports on its way to Algeria, he said.

"Fonterra is a trusted trader and is part of Customs' Secure Export Scheme. Containers are sealed when they are packed, and the seal assures that the container has not been breached until it is loaded onto a ship," he said.

The cargo was later unloaded and reloaded in Panama and Valencia, Spain.

Customs' attache in Brussels was also working to establish the facts, Mr Campbell said.

"Customs has very high confidence in the integrity of New Zealand exports."

A Fonterra spokesman said the company was aware of the reports.

"We're waiting to hear which Algerian authority is leading the investigation and we're on standby to provide any information as required."

Algeria is regarded as an important destination for New Zealand's dairy exports, and trade in that sector has grown impressively over recent years, according to information from the Ministry of Foreign Affairs and Trade.