On August 7 in Washington, in the presence of Azerbaijani President Ilham Aliyev and U.S. Presidential Special Representative Steve Witkoff, a Memorandum of Cooperation was signed between the State Oil Company of the Republic of Azerbaijan (SOCAR) and American energy giant ExxonMobil. The document was signed by Azerbaijani Minister of Economy Mikayil Jabbarov and ExxonMobil Vice President John Ardill.
ExxonMobil has been operating in Azerbaijan for three decades, but the agreement concluded in Washington marks a significant milestone - especially in light of past tensions between ExxonMobil and BP, the operator of the Azeri-Chirag-Gunashli (ACG) project.
The company entered Azerbaijan in 1995, one year after the signing of the “Contract of the Century,” and soon joined the ACG project before becoming a shareholder in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline. In 2017, ahead of extending the contract for another 30 years, negotiations between BP and ExxonMobil became strained: due to falling global oil prices, the American company was reluctant to renew the deal on previous terms. Media outlets, particularly in Russia, actively promoted the narrative that ExxonMobil was preparing to leave Azerbaijan, citing declining reserves and reduced contract appeal. Around the same time, another U.S. company - Chevron - announced plans to exit, fueling headlines about “America leaving Azerbaijan.”
By 2018, speculation had intensified. Yet in 2017, ExxonMobil had actually expanded its presence by joining the shareholders of BTC Co., the pipeline’s operating company, and acquiring a 2.5% stake from CIECO BTC (UK) Ltd, a subsidiary of Japan’s Itochu Corporation. BP CEO Robert Dudley openly stated in 2019 that the company would consider buying ExxonMobil’s and Chevron’s stakes in ACG, highlighting BP’s strong interest in the project. Azerbaijani officials also indicated their willingness to purchase these assets. Eventually, Chevron sold its stake to Hungary’s MOL, while ExxonMobil retained its 6.79% share.
With Donald Trump’s arrival in the White House, political relations between Baku and Washington saw a notable thaw, revitalizing energy cooperation as well. In March this year, John Ardill, Mikayil Jabbarov, and SOCAR President Rovshan Najaf discussed opportunities for expanding collaboration. By June, during Baku Energy Week, ExxonMobil and SOCAR had signed a memorandum on the exploration and production of hard-to-recover hydrocarbons onshore.
These unconventional reserves - such as shale oil and gas, deepwater deposits, and gas hydrates - are trapped in porous rock formations and require specialized extraction methods, including hydraulic fracturing. While onshore production currently accounts for only about 5% of Azerbaijan’s oil output, Ilham Shaban, head of the Azerbaijan Oil Research Center, sees strong potential in this area. He notes that ExxonMobil’s advanced technologies could be deployed to assess the commercial viability of developing onshore resources in Absheron, Shabran, Salyan, Neftchala, as well as in western regions such as Naftalan, Gazakh, and Tovuz.
Production at the Muradkhanli-Jafarly-Zardab block ceased in 2020, but certain reserves remain. The upcoming exploration program will determine whether these deposits warrant industrial-scale development.
Modern technology can work wonders, unlocking resources once considered economically unreachable. For Azerbaijan, this represents a valuable opportunity: developing hard-to-recover onshore reserves could not only boost total output but also diversify its resource base, reducing reliance on offshore fields. Importantly, onshore projects are typically simpler and less costly in terms of logistics and infrastructure, which means that - if exploration results are promising - they could be brought into production much faster. In today’s environment, where fossil fuels have returned to the center of the global energy agenda with Donald Trump’s resurgence, Azerbaijan has the chance to strengthen its position as a reliable supplier of hydrocarbons, expand its export potential, and attract fresh investment into its economy. The successful implementation of joint projects with ExxonMobil could become not just an economic asset, but a strategic lever, enhancing the country’s role in both the regional and global energy architecture.
By Tural Heybatov
