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Akbar Novruz

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Uzbekistan’s Energy Ministry, Uzbekneftegaz OJSC, and Azerbaijan’s state oil company SOCAR have signed a landmark production-sharing agreement to explore for hydrocarbons in Uzbekistan’s Ustyurt oil and gas region, Azernews reports.

According to the Uzbek Energy Ministry, the agreement reflects a growing strategic partnership between Azerbaijan and Uzbekistan and marks a major step in strengthening bilateral energy ties. The PSA outlines plans for 3D seismic surveys across an area of no less than 1,000 square kilometers. Based on the survey findings, an initial exploratory well will be drilled. If commercially viable reserves are found, the parties will proceed to full-scale development and production.

SOCAR President Rovshan Najaf stated that this initiative aligns with the company’s long-term goals in Central Asia and the Caspian region: “SOCAR is embarking on this project with great enthusiasm, applying its accumulated experience and advanced technologies. We are confident that this cooperation will make a significant contribution to Uzbekistan’s energy security and infrastructure development.”

Uzbek Energy Minister Zhurabek Mirzamakhmudov underscored the broader significance of the deal: “Ustyurt has great potential, and the signing of the production sharing agreement opens up new opportunities for its development. We are confident that the project will become an important driving force for technological progress and economic growth.”

Bahodir Siddiqov, Chairman of the Board of Directors of Uzbekneftegaz OJSC, described the PSA as a milestone: “This strengthens the position of Uzbekneftegaz as a reliable and innovative partner, a company open to international cooperation and large-scale investments.”

Production sharing agreements are commonly used in the oil and gas sector to attract foreign investment by allowing companies to recover costs from a share of extracted resources. This model also encourages technology transfer and risk-sharing between governments and investors.

The partnership is viewed as part of a broader trend of deepening Azerbaijani engagement in regional energy markets, signaling Baku’s ambition to extend its technical expertise and strategic footprint beyond the Caspian basin.

According to SOCAR's statement, the attendees expressed satisfaction with the growing cooperation between SOCAR and Uzbekneftegaz JSC. They emphasized the importance of signing the Share Sharing Agreement for the exploration, development, and production of the Ustyurt investment blocks, which include Boyterak, Terenggudug, Birgori, Kharoy, Goragalpog, and Gulboy. The prospects for collaboration between the two companies were also discussed.

Subsequently, a Share Sharing Agreement was signed between SOCAR, the Uzbekneftegaz Consortium, and the Government of the Republic of Uzbekistan. This agreement pertains to the exploration, development, and production of the Ustyurt investment blocks in Uzbekistan.

In the initial phase of the agreement, geological exploration work is planned to identify promising areas. During this period, SOCAR will serve as the operator. According to the agreement, it is expected that exploration activities will be completed, and at least one exploration well will be drilled within the first five years.

The signing of this agreement opens up new opportunities for strategic cooperation in the energy sector and is expected to benefit both parties.