Azerbaijan has approved a new production sharing agreement covering parts of the Guba, Gusar, Shabran, Siyazan and Khizi districts. The agreement was signed on February 18, 2026, between the State Oil Company of the Republic of Azerbaijan (SOCAR), Gran Tierra Energy (Azerbaijan) GmbH and SOCAR Guba-Khazaryani LLC. The relevant law was adopted on September 30, 2026, and officially published on October 12, 2026.
The agreement establishes a legal framework for hydrocarbon exploration, development and production activities within the designated contract area. The law also approves the guarantees and undertakings provided by the Government of Azerbaijan to the contractor parties, together with ten annexes forming part of the agreement.
Under the legislation, the agreement, government guarantees and annexes acquire the force of law upon the law’s entry into force. Unless otherwise expressly provided in the agreement, their provisions prevail over conflicting existing or future Azerbaijani legislation and administrative acts throughout the agreement’s validity period.
The legislation grants the participating contractors exclusive rights to conduct oil and gas operations within the contract area, while superseding previously granted rights and obligations relating to that area. It also protects the contractors’ contractual rights and interests against modification or reduction without their prior consent.
To facilitate implementation, the law provides for the necessary licences, customs permits, visas and other authorisations required for activities under the agreement. Any subsequent amendments to the agreement or its annexes must comply with the contractual provisions and receive the written consent of the relevant parties.
The approval represents a further step in establishing the legal and investment framework for hydrocarbon exploration and potential development in Azerbaijan’s northern onshore regions. It authorises the project to proceed under the agreed contractual arrangements, without itself confirming the discovery of commercially recoverable oil or gas reserves.
