Uzbekistan’s Ministry of Energy, Azerbaijan’s state-owned oil company SOCAR, and Uzbekneftegaz have signed a landmark Production Sharing Agreement (PSA) aimed at boosting exploration and production of hydrocarbons in the Ustyurt oil and gas region.
The agreement, signed on July 24, 2025, outlines a strategic collaboration between the three parties to conduct geological exploration on investment blocks in Ustyurt, a key energy-rich area in northwestern Uzbekistan.
The project will begin with 3D seismic surveys covering at least 1,000 square kilometers, followed by the drilling of an exploratory well. If industrial-scale hydrocarbon deposits are discovered, development and production phases will commence.
Officials from all three entities hailed the agreement as a milestone in Uzbekistan-Azerbaijan energy cooperation.
This agreement reflects the strong political will of our Presidents—Shavkat Mirziyoyev and Ilham Aliyev—whose shared commitment has elevated strategic ties to a new level. It is also aligned with New Uzbekistan’s strategy to attract foreign investment and apply international best practices.
“This PSA strengthens SOCAR’s presence in Central Asia and supports energy infrastructure development in Uzbekistan. We look forward to applying our technological expertise to this promising region,” SOCAR President Rovshan Najaf emphasized the regional significance of the deal.
Chairman of Uzbekneftegaz Bakhodirjon Sidikov highlighted that the agreement strengthens the national energy sector by promoting modernization, international cooperation, and attracting large-scale investments for innovation and growth.
Under the PSA framework, the investor (in this case, SOCAR and Uzbekneftegaz) gains exclusive rights to carry out exploration and production. Initial costs are reimbursed from a share of the extracted resources, while the remaining profits are split between the parties based on pre-agreed terms. This structure is widely used to attract foreign capital and advanced technologies while ensuring a fair balance of risks and rewards.
The State Oil Company of the Azerbaijan Republic (SOCAR) is Azerbaijan’s national oil and gas company, with operations ranging from exploration and production to refining, logistics, and marketing. It is actively engaged in international energy projects across Europe, Asia, and the Middle East.
Uzbekneftegaz is Uzbekistan’s largest energy company, responsible for over 60% of the country’s natural gas production. The company oversees full-cycle operations from exploration and drilling to distribution and export, playing a critical role in Uzbekistan’s energy strategy.
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