The entry of international energy company BP into the production sharing agreement (PSA) for the North Ustyurt blocks will accelerate project implementation and elevate it to a higher technological level, according to Nodir Muhiddinov, Chief Geologist of Uzbekneftegaz, who spoke with journalists on May 13.
Muhiddinov stated that BP's involvement brings a “world-renowned, technologically advanced, and highly experienced company with great potential in the oil and gas sector.” He added, “This will enable the discovery of promising oil and gas fields in Ustyurt, the exploration of prospective areas through geological surveys, and the discovery of new deposits.”
Regarding the size of BP's investment, the Uzbekneftegaz representative said the amount would be determined based on the PSA terms. The agreement covers the Boyterak, Terenguduk, Birkori, Haroy, Karakalpak, and Kulboy blocks located in the Ustyurt region of Karakalpakstan. The project is being implemented in cooperation with Uzbekneftegaz and SOCAR.
BP acquired a 40% participating interest in the PSA, purchasing 20% from each of the existing partners, SOCAR and Uzbekneftegaz. After BP's entry, the shares are distributed as follows: BP — 40%, Uzbekneftegaz — 30%, and SOCAR, which retains operator status, — 30%.
“Currently, the main goal of this agreement is to conduct geological exploration, i.e., to discover new fields. After new resources and fields are identified, and once production and gas supply begin, the issue of distribution will be considered. For now, the primary task is to discover new fields based on exploration results. The main objective of the project is to open a new field and identify new reserves,” Muhiddinov said.
He added that SOCAR and BP, as internationally experienced companies, are taking into account the geological and technological risks of the project. Responding to a question about benefits for Uzbekistan, the chief geologist emphasized that the fields remain the property of the country and are not transferred to foreign investors.
“Uzbekistan's interests are certainly well protected. Because when the agreement was signed, firstly, a large share of Uzbekneftegaz is retained. Secondly, it must be well understood that even after the field is discovered, it remains a field of Uzbekistan. That is, later, under the contract, only the extracted products are distributed. But the field itself belongs to Uzbekistan; it is not fully transferred to foreign investors,” he said.
According to him, product sharing will begin only after the field is discovered and the project yields results. “Here, the product is distributed only after the field is discovered and benefits are obtained, based on an appropriate scheme and mutual distribution system. At the same time, the agreement stipulates that the economic interests of all parties, especially Uzbekistan's, are significantly taken into account,” Muhiddinov said.
He also confirmed that the extracted products will be directed to domestic needs. According to him, the first phase of the project is designed for five years, and further implementation will depend on the results. When asked about the portion of products for the domestic market versus export, Muhiddinov said these are commercial matters that are not yet disclosed.
Speaking about potential reserves, the chief geologist of Uzbekneftegaz said it is too early to give exact volumes, as seismic surveys have just begun. “Because based on the results of geophysical work, deep drilling will be carried out first. Only after that will it be possible to talk about reserves,” he said.
On July 24, 2025, a production sharing agreement was signed between the Ministry of Energy of Uzbekistan, the State Oil Company of Azerbaijan (SOCAR), and Uzbekneftegaz. The document provides for geological exploration and subsequent hydrocarbon production at the investment blocks of the Ustyurt oil and gas region — Boyterak, Terenguduk, Birkori, Haroy, Karakalpak, and Kulboy.
According to the document, exploration and appraisal work, as well as drilling at least one exploration well, are planned to be completed within five years. During this period, SOCAR will act as operator. Estimates suggest that the project could identify reserves of up to 100 million tons of oil and 35 billion cubic meters of gas. The planned investment volume is estimated at $2 billion.
SOCAR and BP had previously expressed interest in the Ustyurt region of Karakalpakstan. In May 2018, a memorandum was signed inviting Uzbekneftegaz, SOCAR, and BP Exploration (Caspian Sea) to jointly develop the Aral Sea, Som-Kosbulak, and Boyterek investment blocks on the Ustyurt plateau.
In 2021, BP withdrew from the Ustyurt oil and gas field development project. The reason cited for the British company's exit was a change in strategy — choosing a “green” path and abandoning new investments in hydrocarbons. However, the British company is now revising its strategy again: it is abandoning plans to reduce oil and gas production by 2030, focusing on hydrocarbons to increase investor returns.
A production sharing agreement is a contract that grants a foreign investor the right to extract minerals, under which part of the extracted products remains with the investor, and the rest goes to the state. The PSA determines what share of extracted oil or gas the parties receive after recovering costs during industrial-scale operations.
Source: www.gazeta.uz