Bakhodirjon Sidikov: Uzbekneftegaz showing interest in leading oil, gas projects in Azerbaijan

Uzbekistan and Azerbaijan are stepping up cooperation in the energy sector, advancing joint participation in strategic oil and gas projects. A landmark step was the signing of a Production Sharing Agreement (PSA) between Uzbekistan’s Ministry of Energy, the State Oil Company of Azerbaijan (SOCAR), and Uzbekneftegaz JSC for investment blocks in the Ustyurt region.

The agreement paves the way for long-term collaboration, covering geological exploration, field development, technology deployment, and the expansion of processing capacities.

In an exclusive interview with Report, Bakhodirjon Sidikov, Chairman of the Board of Uzbekneftegaz JSC, shared insights into the timelines for geological exploration, pilot production prospects, Azerbaijan’s role in boosting processing capacities, and new avenues of bilateral cooperation.

– A Production Sharing Agreement was recently signed for the Ustyurt region. When is geological exploration expected to begin?

– According to the approved roadmap, geological exploration in the Ustyurt investment blocks will commence in the first quarter of 2026. This timeline allows us to complete the organizational and preparatory phase, including obtaining the necessary permits.

– How are participation shares distributed under the PSA? Are they fixed or subject to adjustment?

– Currently, the shares are distributed on a parity basis. However, the structure is designed with flexibility in mind, allowing adjustments depending on the stage of project implementation.

– SOCAR has been designated as the operator at the exploration stage. What role will Uzbekneftegaz play, and is a transfer of operatorship possible in the future?

– At the initial stage, Uzbekneftegaz provides institutional and technical support, which includes facilitating permits, transferring geological and geophysical data, and liaising with government authorities. The potential transfer of operator functions will be considered based on project results and the strategic interests of both parties.

- What are the timelines outlined in the project roadmap - from the beginning of geological exploration to the start of production? Is a pilot phase planned?

- According to the PSA terms, the geological exploration phase is planned for five years. If commercial reserves are confirmed, the project will move to pilot production and testing of development technologies.

- Have geological or seismic surveys been previously conducted in the Ustyurt region on these investment blocks? Are there archival data available to partners?

- Geophysical and geological surveys have indeed been conducted on some of the blocks. Uzbekneftegaz transfers relevant geological, seismic and drilling materials in its possession to partners according to established procedures, including data obtained from previous projects.

- What sources will fund the geological exploration work in the first stage? Will external financing or government support be involved?

- At the initial stage, funding is provided by investors, with equal distribution of obligations between the parties. If necessary, external financing may be attracted. The state, in turn, creates favorable tax and legal conditions, including through a special tax regime within the PSA framework.

- Previously, Uzbekneftegaz's possible participation in the development of the Shah Deniz gas condensate field in the Azerbaijani sector of the Caspian was discussed. Does interest in this direction remain?

- Uzbekneftegaz JSC maintains strategic interest in participating in international projects, including projects in Azerbaijan. We are open to dialogue and are analyzing various scenarios for potential partnership with SOCAR.

- Besides Shah Deniz, is your company interested in other major Azerbaijani fields such as Absheron, Azeri-Chirag-Gunashli, Umid-Babek? Are options being considered for Uzbekneftegaz to participate in them as an investor, operator, or technological partner?

- Uzbekneftegaz shows interest in Azerbaijan's leading projects. We are considering cooperation opportunities both in the format of investment and within the framework of technological exchange and production cooperation.

- Are there any ongoing negotiations with SOCAR about other joint projects in Azerbaijan? Are they possible in the areas of exploration, underground gas storage, gas chemistry, or LNG?

- Uzbekneftegaz and SOCAR are in constant dialogue, exploring promising areas of cooperation. At this stage, we are discussing opportunities for interaction in such priority areas as digitalization of processes in the oil and gas industry, implementation of green technologies, and improvement of industrial safety. We are confident that sustainable partnership should be built not only on economic interests but also on modern approaches to technological and environmental development.

- At what stage is the cooperation between Uzbekistan and Azerbaijan in the field of petrochemistry? Are interaction formats being considered - creation of joint production facilities, raw material partnership, technology exchange?

- For Uzbekneftegaz, the development of processing and petrochemical capacities is an important national priority. In this direction, we are actively studying international experience and advanced technological solutions, including the potential for bilateral and multilateral cooperation with Azerbaijan. Issues of creating joint production facilities or technological exchange may develop as the interests of the parties are coordinated.

- The development of processing and petrochemical capacities is one of the key directions of national energy policy. In this context, Uzbekneftegaz is exploring various models of cooperation with international partners, including SOCAR, taking into account logistical, infrastructural, and technological factors. - Is there a plan to create a joint venture with Azerbaijan for the export of petrochemical products or hydrocarbons to third countries? Which markets and directions (upstream, processing, logistics, trading) seem most promising? Are there pilot projects that could be presented in the near future? - Uzbekneftegaz and SOCAR are already cooperating in the field of international hydrocarbon trading through a joint trading company established at the end of 2023. Within this partnership, work is being done on optimizing logistics routes and entering key export markets, including Türkiye, the European Union, and others. Further opportunities for expansion are being explored both in the segment of physical trading and in the sphere of flexible supplies to third countries.