ExxonMobil and Azerbaijan’s state energy firm SOCAR have signed a memorandum of understanding to explore unconventional onshore oil reserves in a move that could open a new chapter for the country’s hydrocarbon sector.
Announced during Baku Energy Week, the deal marks Exxon’s entry into Azerbaijan’s underdeveloped onshore oil segment, which currently accounts for just 5% of national production. While no exploration drilling is planned yet, Exxon’s expertise in unconventional oil—typically trapped in porous rock and requiring advanced techniques like fracking—could significantly boost future output.
“This is a first step toward assessing resource potential and economics,” said John Ardill, Exxon’s VP of global exploration.
Exxon already holds stakes in Azerbaijan’s flagship Azeri-Chirag-Gunashli oilfield and the Baku-Tbilisi-Ceyhan pipeline. The new agreement strengthens its position in the region as Azerbaijan seeks to sustain its 582,000 b/d production target over the next five years.
Meanwhile, three sources confirmed that SOCAR will announce the sale of stakes in the Karabakh and Ashrafi-Dan Ulduzu-Aypara offshore fields to BP, with BP expected to become operator of the Karabakh project. BP had signed a prior MoU with SOCAR on these projects after Norway’s Equinor exited in 2017.
In parallel, BP said it has reached final investment decision on the 240 MW Shafag solar project in Jabrayil, to be built with SOCAR and Azerbaijan’s Business Development Fund. The $200 million solar plant is expected to be completed by mid-2027.
President Ilham Aliyev also stated that Azerbaijan aims to boost natural gas exports by 8 bcm by 2030, following 25 bcm in 2024, underlining the country’s dual push for conventional and renewable energy expansion.
