SOCAR (Azerbaijan) and Uzbek oil and gas company Uzbekneftegaz are launching a joint exploration and production project.

Project Launch: A New Milestone in Deepening Energy Cooperation

The joint mineral resource exploration and production project launched by Uzbekistan and Azerbaijan on the Ustyurt Plateau marks a substantial new stage in energy cooperation between the two countries. According to information released by the Azerbaijani Ministry of Energy, the country's national oil company (SOCAR) and Uzbekistan's Uzbekistan Oil and Gas Company (Uzbekneftegaz) have commenced work on the project in the Ustyurt region of Karakalpakstan. The launch ceremony was held in Tashkent, and Uzbek President Shavkat Mirziyoyev personally attended, highlighting the strategic importance of this cooperative project.

Azerbaijani Energy Minister Parviz Shakhbazov, speaking via video link, introduced the progress of cooperation, noting that "Uzbekistan is currently simultaneously advancing multiple joint projects with Turkey, the UAE, Saudi Arabia, China, and Azerbaijan in different regions of the country." This statement reveals Uzbekistan's diversified cooperation strategy in the energy sector and the important role Azerbaijan plays within it.

Political Foundation: Energy Manifestation of a Strategic Alliance

Shakhbazov explicitly stated that the political foundation of the bilateral relationship is a crucial support for this cooperation. He particularly emphasized that "the highest level of political will has elevated Azerbaijan-Uzbekistan relations to the level of a strategic alliance, with mutual trust and personal friendship between the two leaders playing a key role." This high-level political interaction provides a stable framework for energy cooperation, enabling technical projects to possess a depth of strategic cooperation.

At the specific cooperation level, Uzbekistan's oil and gas company and SOCAR signed a production sharing and exploration agreement on July 24, 2025, to conduct geological exploration activities within designated investment blocks in Uzbekistan. The newly launched Usthurst project is one of the first major cooperative projects under this agreement. This rapid progress from agreement signing to project launch reflects the efficiency of the energy cooperation mechanism between the two countries.

Regional Energy Integration: The Vision of the Trans-Caspian Energy Corridor

In addition to specific exploration projects, the Azerbaijani Energy Minister also highlighted a broader initiative—the Trans-Caspian Energy Corridor. Shakhbazov stated, “This project aims to interconnect the power grid systems of Azerbaijan, Uzbekistan, and Kazakhstan for the first time. Leveraging Azerbaijan's role as a transit hub, the corridor is expected to gradually expand, thereby enabling the transmission of renewable energy along the ‘middle corridor’ connecting Asia and Europe.”

This vision transcends traditional fossil fuel cooperation, focusing on the integration of renewable energy with regional power grids. The Usthurst project holds dual significance within this framework: it represents both current hydrocarbon resource development and lays the foundation for broader future energy cooperation. Shakhbazov explicitly stated, "This project reaffirms the strategic importance of our partnership in the energy sector, strengthens the exchange of experience and technology between the two countries in the hydrocarbon industry, and creates conditions for regional energy integration and a shared commitment to energy security."

Geoeconomic Context: The Evolution of the Energy Landscape in Central Asia

From a regional perspective, the cooperation between Uzbekistan and Azerbaijan reflects the restructuring of energy relations in the post-Soviet space. Traditionally, Central Asian energy exports have relied heavily on the Northern Corridor, but in recent years, countries have actively sought diversified routes. Azerbaijan, with its geographical advantage at the crossroads of Eurasia and its established infrastructure such as the Baku-Tbilisi-Ceyhan pipeline, has become a potential partner for Central Asian countries seeking access to Western markets.

Uzbekistan, as the most populous and economically diversified country in Central Asia, possesses both energy demand and export potential. According to data from the International Energy Agency, Uzbekistan has natural gas reserves of approximately 1.1 trillion cubic meters, but exploration and development are uneven, with areas such as the Ustyurt Plateau still holding exploration potential. Cooperation with Azerbaijan brings not only capital and technology but also access to global markets through Azerbaijani infrastructure.

Multilateral Cooperation Networks: A Model of International Partner Participation

The network of multinational joint projects mentioned by the Azerbaijani Energy Minister reflects the complex cooperation model in Central Asian energy development. Turkey, the UAE, Saudi Arabia, and China, among others, participate in Uzbekistan's energy sector in various forms, forming a complex network of multilateral cooperation. This model reduces the risk of single-country dependence but also increases the complexity of coordination.

China, through energy cooperation under the Belt and Road Initiative, has become a significant player in Central Asian energy infrastructure; Turkey, leveraging linguistic and cultural ties and its growing geopolitical influence, actively expands its energy ties with Turkic-speaking countries; the UAE and Saudi Arabia, through sovereign wealth funds and oil capital, seek investment diversification in Central Asia. Azerbaijan has both cooperative and, to some extent, competitive relationships with these countries, but the Ustyurt project highlights Azerbaijan's unique position within this competitive cooperation network.

Technical Exchange: Professional Cooperation in the Hydrocarbon Sector

From a technical perspective, Azerbaijan has accumulated rich experience in Caspian Sea oil and gas development, particularly in offshore exploration and extraction under complex geological conditions. SOCAR, as a regional state-owned energy company, has proven its technical capabilities through international cooperation. Uzbekistan's oil and gas company has in-depth knowledge of its own geological structure and extraction environment, but may require external support in certain cutting-edge technologies.

Shakhbazov's emphasis on "experience and technology exchange" embodies this complementarity. The production sharing agreement model institutionalizes risk and benefit allocation, providing stable expectations for long-term cooperation. This cooperation is not limited to resource extraction but may extend to downstream stages such as refining, storage, and transportation, forming a more complete energy cooperation chain.

Energy Transition Context: Synergy between Traditional and Renewable Energy

In the context of global energy transition, traditional oil and gas cooperation projects face new scrutiny. However, for developing countries like Uzbekistan, hydrocarbon resources remain a crucial guarantee for energy security and fiscal revenue in the short term. Meanwhile, the long-term vision for cooperation between the two countries explicitly includes renewable energy elements, particularly the trans-Caspian energy corridor's concept of "transmitting renewable energy."

This strategy of "parallel development of traditional resources and renewable energy infrastructure" reflects a pragmatic approach to energy transition. On the one hand, it seeks immediate benefits and technological capabilities through traditional energy cooperation; on the other hand, it prepares infrastructure and cooperation mechanisms for future energy structure transformation. Azerbaijan itself is also promoting renewable energy development, planning to increase the share of renewable energy to 30% by 2030, and its experience can provide a reference for Uzbekistan.

Regional Security Dimension: Non-Economic Effects of Energy Cooperation

Energy cooperation often has geopolitical significance that transcends the economic sphere. Central Asia has long faced potential tensions such as water resource disputes and border issues; energy cooperation can serve as a channel to enhance mutual trust and establish institutionalized connections. Azerbaijan and Uzbekistan are both Islamic countries, but belong to the Shia and Sunni sects respectively; their energy cooperation demonstrates a pragmatic cooperation model that transcends sectarian differences.

Furthermore, regional energy integration helps improve collective energy security and reduce the impact of supply disruptions in a single country. Measures such as grid interconnection and diversification of transit routes can enhance the ability of regional countries to respond to emergencies. In the context of the restructuring of the global energy supply chain following the Ukraine crisis, this regional energy integration is of particular significance.

Global Energy Market Perspective: Potential Impact of New Supply Sources

From a global market perspective, if the Ustyurt project achieves commercial discoveries, it will add a new source to global energy supply. Although the scale of a single project may be limited, its symbolic significance and potential cumulative impact as the beginning of a new exploration area in Central Asia cannot be ignored. In recent years, international energy companies' interest in Central Asia has rebounded, but geopolitical risks and the investment environment remain constraints.

As a partner, Azerbaijan's experience in operating international projects may help enhance the project's international credibility. If the project is successful, it may attract more international capital to Uzbekistan's energy sector, especially in relatively underdeveloped areas. However, under the long-term trend of global energy transition, traditional fossil fuel investments face increasingly stringent environmental, social, and governance (ESG) standards, posing a challenge to any new project.

The Middle Corridor Strategy: The Energy Dimension of the Eurasian Land Bridge

The concept of the "Middle Corridor" has gained more attention in recent years in discussions of Eurasian transport connectivity. It primarily refers to a route connecting Central Asia and Europe via the Caspian Sea, the Caucasus, and Turkey, distinguishing it from the traditional Northern Corridor and the Southern Maritime Route. Energy cooperation is a crucial component of this corridor's development, while the concepts of grid interconnection and renewable energy transmission add new dimensions.

Azerbaijan's status as a transit hub is vital in the Middle Corridor strategy. Baku, as a major port on the western Caspian Sea, forms a Caspian shipping network with ports such as Aktau in Kazakhstan and Turkmenbashi in Turkmenistan. Grid interconnection adds a functional dimension to this corridor, making it a multi-modal transport corridor for energy, goods, and electricity. By participating in this network, Uzbekistan can reduce its dependence on the traditional Northern Route and increase its strategic options.

Challenges and Prospects: Preconditions for Sustainable Cooperation

Despite the positive prospects for cooperation, the Ustyurt project and broader energy cooperation still face multiple challenges. Geological exploration itself is inherently uncertain, with long investment return cycles; cross-border energy cooperation requires coordination of various regulations, including legal, tax, and environmental ones; regional political dynamics can affect the stability of long-term cooperation; and global energy price fluctuations can also impact project economics.

Furthermore, environmental and social impact management is increasingly becoming a key focus for international energy projects. The Usthurst Plateau ecosystem is fragile, and any development activities must carefully assess environmental risks and establish effective mitigation measures. The interests of local communities should also be incorporated into project planning to ensure the equitable sharing of benefits from resource development.

In the long term, energy cooperation between Azerbaijan and Uzbekistan may expand into broader economic cooperation. The interconnectivity, institutional coordination, and mutual trust created by energy projects can create favorable conditions for cooperation in other areas such as trade, investment, and cultural exchanges. In the evolving geoeconomic landscape of Eurasia, such bilateral cooperation may become an important node in regional networked cooperation.

Conclusion

The energy cooperation project launched by Uzbekistan and Azerbaijan on the Ustyurt Plateau is a concrete manifestation of their strategic relationship in the energy sector and a microcosm of the evolving energy landscape in the Central Asia-Caspian region. This project encompasses both traditional hydrocarbon resource development and connects to the broader vision of a trans-Caspian energy corridor, reflecting multi-layered strategic thinking on traditional and new energy sources, bilateral cooperation, and regional integration.

Against the backdrop of global energy transition and geopolitical changes, this cooperation faces both challenges and opportunities. Its implementation and ultimate effects will not only impact the energy security and economic development of both countries but may also provide new practical models for internal connectivity across Eurasia. As the project progresses, its technological achievements, cooperation mechanisms, and regional impact deserve continued attention.