Uzbekneftegaz and SOCAR to Develop Ustyurt Hydrocarbon Reserves
On July 24, 2025, the Ministry of Energy of Uzbekistan, the State Oil Company of the Azerbaijan Republic (SOCAR) and Uzbekneftegaz JSC signed a Production Sharing Agreement (PSA) for joint geological exploration and hydrocarbon development in the Ustyurt oil and gas region.
The agreement represents a milestone in Uzbekistan–Azerbaijan strategic energy cooperation, made possible through the shared vision and political will of Presidents Shavkat Mirziyoyev and Ilham Aliyev. It lays the groundwork for long-term collaboration in the exploration and commercial production of hydrocarbons.
Under the terms of the agreement, the parties plan to conduct 3D seismic surveys over an area of at least 1,000 sq km, followed by exploratory drilling at a selected site. If commercially viable reserves are discovered, the next phase will involve full-scale development and production.
A New Chapter for Central Asian Energy
SOCAR President Rovshan Najaf described the deal as a demonstration of the company’s long-term commitment to energy development in Central Asia and the Caspian region. «We are eager to bring our experience and cutting-edge technologies to Uzbekistan, helping to ensure the country’s energy security and infrastructure growth,» he said.
Uzbek Energy Minister Jurabek Mirzamakhmudov highlighted that the partnership reflects Uzbekistan’s drive to attract diversified investment and apply international best practices. «The Ustyurt region has significant potential, and this PSA opens new horizons for its efficient development,» he noted.
Bahodirjon Sidikov, Chairman of Uzbekneftegaz, emphasised the strategic value of the agreement: «This is a major step in advancing our national oil and gas sector. It reinforces Uzbekneftegaz’s role as an innovative and internationally engaged energy partner.»
What Is a Production Sharing Agreement?
A Production Sharing Agreement (PSA) is a contractual arrangement between a government and an investor, granting exclusive rights to carry out oil and gas operations. The investor covers exploration and development costs and recovers them from a portion of the extracted resources (known as cost oil), while the remaining profit is divided according to agreed terms. This model offers a fair balance of risk and reward, encouraging foreign direct investment and technology transfer.
About the Companies
SOCAR, Azerbaijan’s national oil and gas company, operates across the entire energy value chain — from exploration and extraction to processing, transport and sales. The company has a growing international footprint, with major projects in Europe, Asia and the Middle East. It is known for its technological capabilities and strong corporate governance.
Uzbekneftegaz JSC is Uzbekistan’s largest state-owned energy company, responsible for more than 60% of the country’s natural gas production. It manages a full cycle of oil and gas operations and is committed to expanding international partnerships, embracing innovation and strengthening its global competitiveness.
Kursiv also reports that Azerbaijan’s SOCAR aims to explore and extract oil in the Ustyurt region.
