ExxonMobil and SOCAR Expand Partnership with New Onshore Oil Agreement in Azerbaijan

Deal Strengthens U.S. Economic Presence in the South Caucasus

BAKU/WASHINGTON — ExxonMobil and Azerbaijan’s state energy company SOCAR have signed a new memorandum of understanding to explore and potentially develop unconventional onshore oil reserves in Azerbaijan, building on a similar agreement announced in June.

The deal was formalized in Washington on August 7 in the presence of Azerbaijani President Ilham Aliyev and U.S. presidential envoy Steve Witkoff. It was signed by Azerbaijani Economy Minister Mikayil Jabbarov and ExxonMobil Vice President John Ardill, ahead of high-level peace talks between Aliyev, Armenian Prime Minister Nikol Pashinyan, and U.S. President Donald Trump.

The latest memorandum follows a June agreement during the Baku Energy Week conference, where the two companies committed to assessing unconventional onshore oil and gas opportunities. Such resources, often locked in porous rock formations, require advanced extraction technologies, including hydraulic fracturing. Currently, onshore output accounts for about 5% of Azerbaijan’s oil production.

ExxonMobil already holds stakes in the country’s largest oil project, Azeri–Chirag–Gunashli, and in the Baku–Tbilisi–Ceyhan pipeline, which transports Caspian crude to global markets. The new accord aims to diversify Azerbaijan’s energy output and sustain production near current levels of roughly 582,000 barrels per day over the next five years.

(Location of Baku–Tbilisi–Ceyhan pipeline)

Separately, SOCAR is expected to sell stakes in the Karabakh and Ashrafi-Dan Ulduzu-Aypara offshore oil and gas fields to BP, which would take over as operator of the Karabakh development project. This follows BP’s earlier memorandum with SOCAR to join the projects, replacing Norway’s Equinor, which exited in 2017.

Azerbaijan is also targeting a significant boost in natural gas exports, with President Aliyev announcing plans to increase volumes by 8 billion cubic meters by 2030, up from 25 bcm exported in 2024.

BP confirmed it had taken a final investment decision on the 240-megawatt Shafag solar plant in Azerbaijan’s Jabrayil district. The $200 million project, developed with SOCAR and the Azerbaijan Business Development Fund, is expected to be completed by mid-2027.

Analysts say the ExxonMobil–SOCAR partnership reinforces U.S. economic involvement in the South Caucasus and could support future energy transit routes, including the planned Zangazur corridor linking Azerbaijan with Nakhchivan and beyond.