ExxonMobil and SOCAR have moved from study agreements to a 50/50 production-sharing contract for unconventional oil and gas in Azerbaijan’s Middle Kura Basin.

The deal, exchanged on September 26, 2026, at the Second Azerbaijan International Investment Forum in the presence of President Ilham Aliyev, makes ExxonMobil the operator and still needs parliamentary ratification.

It is the first time a U.S. supermajor has taken operatorship of an onshore unconventional program in Azerbaijan. The country has spent three decades built around BP-operated offshore giants. This PSA is the commercial follow-through to a June 2025 memorandum of understanding at Baku Energy Week and a further cooperation pact signed in Washington in August 2025.

What the contract actually says

The Production Sharing Agreement covers exploration, development, and production of “unconventional hydrocarbon resources” in the Middle Kura Basin. Participating interests are split evenly through subsidiaries: 50 percent SOCAR, 50 percent ExxonMobil. ExxonMobil is the operator. The documents were exchanged by SOCAR President Rovshan Najaf and Keith Simpson, ExxonMobil’s global unconventional exploration manager.

Bloomberg described the venture as Exxon taking its fracking expertise overseas to pump oil and natural gas from Azerbaijan’s shale fields. Legal and regulatory structures for hydraulic fracturing outside the United States are more complex than Permian-style operations; the companies had been negotiating commercial terms for more than a year with U.S. political backing.

The acreage maps to the west-central onshore fairway earlier described as the Ganja–Yevlakh–Aghjabadi area, centered on the Yevlakh–Agjabadi Depression inside the Middle Kura Basin. That is where SOCAR and Exxon said they would work side by side on subsurface evaluation and commercial feasibility before a PSA.

How many wells?

None have been announced as part of a work program. At the 2025 MoU stage, SOCAR Vice President for Geology Arzu Javadova said the companies were assessing options and were not planning to drill exploration wells at that stage. The PSA now gives them a legal framework to move from study into exploration and, if results justify it, development.

The basin is not virgin rock. Historical drilling in the Middle Kura and adjacent Maykop intervals produced mixed results: oil tests in a majority of some Maykop well sets, weaker results in other intervals, and a long record of conventional onshore fields such as Muradkhanli, Naftalan, Dalimammadli, and Gazanbulag. Those wells were not modern multi-stage horizontal shale wells. A commercial unconventional campaign would look like a U.S. pad program, not a handful of vertical appraisal holes. No pad count, lateral length, or frac design has been released.

Expected oil and national context

There is no official production forecast for Middle Kura unconventionals. In 2025, Exxon Vice President for Global Exploration John Ardill said the partners would talk about resource size and economics “in the years to come.” Economy Minister Mikayil Jabbarov later said Baku was “hopeful” about a large unconventional discovery with ExxonMobil, still without numbers.

That silence is honest, not evasive. Unconventional resource estimates only become bankable after core, pilot laterals, and early EUR data.

What is known about the country around the deal:

• Onshore oil is only about 5 percent of national crude output. Almost everything that matters is offshore.
• Azerbaijan has targeted holding liquids output near 582,000 barrels per day as ACG matures.
• EIA figures cited in 2025 put proved oil reserves at about 7 billion barrels and proved gas at about 60 trillion cubic feet as of January 1, 2025. OPEC year-end 2025 oil reserves for Azerbaijan are also listed at 7.0 billion barrels.
• ACG remains the flagship oil complex. Non-associated gas at ACG is now being developed separately, with recoverable NAG estimates around 4 Tcf and upside toward 6 Tcf. That is offshore and not part of this PSA.

Academic and SOCAR-linked work flags Maykop (Oligocene–Miocene) shales in the Yevlakh–Agjabedi Depression as the main unconventional target: sufficient burial in the depocenter for catagenesis, mixed oil- and gas-prone organic matter, and interbedded seals. Those papers describe prospectivity. They do not publish a certified 2P reserve for the Exxon block.

What kind of oil is this?

Azerbaijan’s export brand is Azeri Light: roughly 35.6 API, about 0.18–0.19 percent sulfur, light and sweet, produced from ACG and shipped mainly as a Dated Brent-linked stream through Ceyhan. ExxonMobil’s own assay matches that gravity and sulfur.

Middle Kura / Maykop onshore oils are not the same stream. Historical onshore production from Maykop and related intervals includes both lighter and heavier, more resinous crudes. Genetic typing of Azerbaijani oils has long distinguished methane-based and naphthene-based families; Absheron and ACG oils are not a perfect analog for inland Maykop shale oil. Until Exxon and SOCAR publish an assay from a stimulated unconventional well, treat quality as unknown and likely different from Azeri Light.

If the play works, blending into BTC Azeri Light would be a commercial choice, not a geological given. Separate marketing is possible.

Natural gas is in the deal

Yes. The PSA language is hydrocarbons, not oil-only. Bloomberg stated oil and natural gas from shale fields. Maykop source rocks in the depression are described in Azerbaijani literature as capable of generating gaseous hydrocarbons as well as liquids. Associated and non-associated gas from unconventionals would compete with, or complement, Shah Deniz, Absheron, and ACG NAG for domestic use and Southern Gas Corridor export capacity.

Separately at the same forum, SOCAR signed a framework with U.S. producer Comstock Resources to study liquefying and marketing Comstock’s Haynesville gas outside the United States. That is not Middle Kura gas. It shows SOCAR’s parallel interest in shale-linked LNG trading.

Are pipelines ready? What does takeaway look like?

Dedicated shale takeaway is not built. The national export machine is designed around the Sangachal terminal and offshore fields:

Baku–Tbilisi–Ceyhan (BTC): about 1.2 million b/d nameplate; Azerbaijan’s main crude export line to Ceyhan. Exxon already holds a stake. Spare capacity exists because ACG is off-peak.

Western Route (Baku–Supsa) and Northern Route (Baku–Novorossiysk) remain secondary oil options.
Gas leaves via the South Caucasus Pipeline and the rest of the Southern Gas Corridor.

The Middle Kura is inland, west of Baku, around Ganja–Yevlakh–Agjabadi. Azerbaijan has a large domestic trunk network (on the order of 4,600 km of main pipelines), and onshore fields have long had local gathering. That is not the same as a multi-pad unconventional gathering system, central processing, produced-water handling, and a high-pressure tie-in to BTC or the gas grid.

Takeaway is therefore a future project cost, not a bottleneck that has already been solved. BTC spare capacity is an advantage if liquids can be trucked, piped, or batched to existing injection points. Gas would need treating and a path into the domestic network or export system. None of that is specified in the PSA announcement.

Water, sand, and completions logistics will matter as much as steel pipe. Azerbaijan has mud-volcano country, dense population corridors in the Kura valley, and agricultural land. Unconventional development will face surface constraints the Permian does not.

Oilfield service companies

The PSA does not name contractors. ExxonMobil, as operator, will run the bid lists. SLB, Baker Hughes, Halliburton, and other international OFS firms already work in Azerbaijan on ACG, Shah Deniz, and SOCAR-operated fields; Baker Hughes, SLB, and Honeywell have been cited in recent official commentary on U.S.–Azerbaijan energy cooperation. Local content rules will pull in SOCAR service units and Azerbaijani contractors.

No Halliburton, SLB, or Baker Hughes award for Middle Kura unconventionals has been announced. That will come after work programs, environmental permits, and the first drilling campaign.

Why the deal exists

Azerbaijan’s oil story since 1994 has been the Contract of the Century: ACG, BTC, and later Shah Deniz and the Southern Gas Corridor. Exxon still holds about 6.79 percent of ACG and a BTC interest. It previously shopped those stakes when the company was concentrating on U.S. shale. The Middle Kura PSA is the opposite trade: export the Permian/Bakken toolkit to a mature petrostate that needs new barrels and has political support in Washington.

Onshore unconventionals will not replace ACG. They can slow the decline, train a local frac workforce, and give SOCAR a second act if Maykop shale responds to modern completions. The honest status as of September 26, 2026 is this: the contract is signed, the operator is named, the resource is not yet booked, the wells are not yet permitted, and the pipelines that matter for a commercial pad program are still a development question.

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