BP has deepened its presence in Azerbaijan’s offshore oil and gas sector with two major moves: acquiring equity stakes in the Karabagh and Ashrafi–Dan Ulduzu–Aypara (ADUA) blocks, and approving a $2.9bn investment in the Shah Deniz Compression (SDC) project, the next phase of development at the country’s largest gas field, BP announced on June 3. 

The agreements, signed during Baku Energy Week between BP and the State Oil Company of the Azerbaijan Republic (SOCAR), grant BP a 35% participating interest in each of the two offshore blocks, according to the two companies. SOCAR retains the remaining 65%, and both projects will be operated by BP.

Karabagh, located 120 km east of Baku near the existing Gunashli field, falls under a 2018 Risk Service Agreement. The ADUA block, 90–110 km northeast of Baku, is governed by a Production Sharing Agreement also signed in 2018 and covers a cluster of previously discovered and prospective structures.

SOCAR president Rovshan Najaf said the agreements represent a new stage in the strategic partnership between the two companies, building on the foundation laid by the late President Heydar Aliyev and continued under the current government. He said BP’s operational experience would be key in unlocking the full value of the blocks.

Gordon Birrell, BP’s executive vice president for production and operations, called the acquisitions a significant opportunity to expand the company’s upstream oil and gas business in the Caspian. "With more than 30 years of successful investment in world-class production and export infrastructure, we are well-positioned to develop these new assets safely and efficiently," he said.

In a parallel development, the Shah Deniz consortium announced the final investment decision for the SDC project, which will bring a new, mostly unmanned, electric-powered compression platform online by 2030. The aim is to extract low-pressure gas and increase recovery from the field. The platform, to be installed 3 km from the existing Shah Deniz Bravo installation, will house four 11-megawatt compressors and handle gas produced from both Shah Deniz Alpha and Bravo before export to the Sangachal terminal. Associated subsea pipelines and new power and data cables from the terminal will support the infrastructure. The $2.9bn project is expected to unlock an additional 50 bcm of gas and 25mn barrels of condensate. Construction will begin in late 2025 and is expected to create up to 4,000 jobs using local resources.

SOCAR’s Najaf described the project as a landmark for Azerbaijan’s energy sector, combining resource longevity, advanced technology and economic development. He noted that local construction and workforce participation underscore SOCAR’s commitment to building national capacity. BP’s regional president, Gary Jones, said the compression phase would ensure Shah Deniz remains a reliable global supplier in the coming decades. “We thank the government of Azerbaijan, SOCAR and all our partners for their continued trust and cooperation,” he said.

The Shah Deniz consortium comprises BP (29.99%, operator), LUKOIL (19.99%), TPAO (19%), Southern Gas Corridor (16.02%), NIKO (10%) and Hungary’s MVM (5%).