Overview of SOCAR's activities in 2025: development priorities

BAKU, Azerbaijan, January 4. Trend presents an overview
of the activities of the State Oil Company of Azerbaijan (SOCAR) in
2025, which highlights the key development directions, major
projects, and the most significant events of the reporting
period.

According to the latest data, in the third quarter of 2025,
SOCAR carried out drilling operations to a total depth of 12,000
meters.

At the fields operated by the company independently or as the
main shareholder, 1.8 million tons of oil and 1.94 billion cubic
meters of gas were produced.

Across the country, gas production increased by 7.4% compared to
the same period in 2024, reaching 13 billion cubic meters. A total
of 7 million tons of crude oil were produced in Azerbaijan in the
third quarter of 2025.

SOCAR exported 4.1 million tons of oil to foreign markets during
the reporting period. This figure includes both the company's own
production volumes and profit shares from oil extracted by
international consortia in the country, belonging to the state of
Azerbaijan and SOCAR. Natural gas exports amounted to 6.3 billion
cubic meters, with consumption at 2.4 billion cubic meters. The gas
export increased by 8.7%.

In the third quarter, SOCAR refined 1.7 million tons of oil and
760 million cubic meters of gas. At the same time, 639,200 tons of
oil, petrochemical, and gas chemical products produced at SOCAR
enterprises in Azerbaijan were exported. Exports of these products
grew by 2.7%.

On December 19, the SOCAR Complex Drilling Works Trust (CDWT)
said that, on behalf of the Azneft production union, it
successfully drilled eight wells at the Western Absheron field in
2025 using directional drilling and handed them over to the
customer with high production indicators.

SOCAR's contractual and partnership base in
2025

On January 15, an agreement was signed between SOCAR's
subsidiary SOCAR Midstream Operations LLC and KazMunayGas (KMG)
subsidiary KMG Trading for the transit of 240,000 tons of Kashagan
oil per year.

In the same month, SOCAR began the transit of crude oil
extracted from the Kazakh Kashagan field through the
Baku-Tbilisi-Ceyhan (BTC) pipeline. The first batch of oil from the
Kashagan field, loaded onto a tanker in the port of Aktau on
January 25, amounted to approximately 6,000 tons. The cargo arrived
at the Sangachal terminal on January 27 and was further transported
via BTC to the Ceyhan port.

On January 21, SOCAR Türkiye Enerji, SOCAR's Turkish subsidiary,
and Nakkaş Holding signed a long-term cooperation protocol. The
document covers the development of logistics for the transportation
of SOCAR products and the creation of a facility for trading and
storing aviation fuel at Sabiha Gökçen Airport.

On January 31, SOCAR signed an agreement with Union Energy to
acquire a 10% share in the Tamar project, one of the largest gas
fields in the Mediterranean basin of Israel.

On February 1, SOCAR began its first onshore airborne gravity
survey project in collaboration with the renowned UK company
Metatek. The goal of this advanced research is to obtain
high-precision geological data over large areas in the shortest
possible time.

On February 13, SOCAR launched the Leucipa monitoring program in
the Caspian region for the first time. This project, being
implemented for the first time in the Caspian region, is a key part
of SOCAR’s upstream sector digital transformation strategy.

On March 29, SOCAR Türkiye completed the transfer of the gas
distribution companies Bursagaz and Kayserigaz to Aksa Doğalgaz.
Aksa Doğalgaz began providing services in the distribution zones of
Bursa and Kayseri, previously managed by SOCAR Türkiye.

On April 28, SOCAR Green LLC and Universal Energy Co., Ltd.
signed a Memorandum of Understanding (MoU) to explore opportunities
for joint renewable energy projects in Azerbaijan. The memorandum
outlines collaborative efforts in project development, EPC
(engineering, procurement, and construction), and O&M
(operation and maintenance).

On June 2, a memorandum of understanding was signed between
SOCAR and Gran Tierra Energy Inc. The document outlines joint
research activities for the technical and economic evaluation of a
project for the exploration, development, and production of
hydrocarbon potential in the Gobustan-Caspian region. At the same
time, Gran Tierra Energy Inc. will analyze the existing geological
and technical data for the project, as well as the logistical and
infrastructure potential. Upon agreeing on the exploration program
and key commercial terms, work will proceed to sign a production
sharing agreement.

On the same day, SOCAR and ExxonMobil Corporation signed a
memorandum of understanding. The document outlines cooperation in
Azerbaijan’s oil and gas sector. Further details of the memorandum
weren't disclosed.

On June 3, an agreement was signed with MOL Group regarding the
main technical and commercial terms of the project. Under the
Memorandum of Understanding signed between the companies on
September 20, 2024, work was completed on coordinating the primary
technical and commercial terms for exploration and development in
the Shamakhi-Gobustan area, and agreements were reached. According
to the basic agreement, MOL Group will hold a 65% share, and SOCAR
will hold a 35% share in the project, with the Hungarian company
acting as the operator.

On June 10, SOCAR and the German state-owned energy company SEFE
(Securing Energy for Europe) signed a ten-year contract for the
supply of natural gas. According to the document, gas volumes will
be supplied by SOCAR to Europe for SEFE. The annual supply volume
will gradually increase to 15 terawatt-hours (TWh), which is
equivalent to approximately 1.5 billion cubic meters of natural
gas. In October, SEFE said the implementation of a new agreement,
without specifying the exact start date of supplies.

On June 21, SOCAR established corporate partnerships with one of
the leading international organizations in quality management — the
Chartered Quality Institute (CQI).

This cooperation will open up access for SOCAR employees to
global expertise, advanced quality management methodologies used by
leading international organizations, as well as opportunities for
training and certification approved by CQI and the International
Register of Certificated Auditors (IRCA). The partnership will
create additional opportunities for enhancing the company's
activities in areas such as social responsibility, industrial
safety, environmental impact reduction, and internal capacity
building.

On July 12, a memorandum of understanding was signed between
SOCAR and the Syrian government.

On July 16, the joint venture SOCAR-KBR LLC, a partnership
between SOCAR and the KBR company, received two contracts from bp
for projects in Azerbaijan. One contract is for supporting the
electrification project at the Sangachal terminal (STEL), and the
other is for the compressor platform project at the Shah Deniz
field (SDC). Under these contracts, SOCAR-KBR will provide detailed
project design and procurement services for both projects.

On July 17, an agreement was signed between SOCAR’s Azerigas
Production Union and Esyasoft Holding LTD (UAE) for the design,
construction, and operation of an intelligent gas network. The main
goal of the project is to improve operational efficiency in gas
distribution in Azerbaijan, optimize costs, reduce existing gas
losses, and improve customer satisfaction with services provided by
Azergaz by using advanced smart gas management technologies.

The project will cover almost 14 years, including the
installation of 2.5 million smart meters and system support stages.
Investments amounting to $480 million are planned. These
investments will enable the digitization of the network,
installation of intelligent pressure and temperature sensors,
creation of a Digital Solutions Lab, employee training,
international experience exchange, AI implementation, cybersecurity
through government cloud data storage, and establishment of a
control center equipped with modern technologies.

Consumers will benefit from more accurate calculations,
real-time usage monitoring, fast issue resolution, remote
servicing, and easy access to consumer data via digital
platforms.

On July 24, 2025, in Tashkent, a Product Sharing Agreement was
signed between the SOCAR consortium, Uzbekneftegaz, and the
Government of the Republic of Uzbekistan for exploration,
development, and production in the Ustyurt investment blocks
(Boyterek, Terengkuduk, Birgori, Kharoy, Karakalpak, and
Kulboy).

In the initial phase, geological survey work will be carried out
to determine prospective areas. During this period, SOCAR will act
as the project operator. The agreement stipulates that geological
survey work will be completed, and at least one exploration well
will be drilled within the first five years.

On December 5, Uzbekistan and Azerbaijan launched a joint
project for geological exploration and hydrocarbon extraction in
the Ustyurt region. The activities of the Ustyurt Operating Company
aim to strengthen the resource base, increase the effectiveness of
geological exploration, and ensure the country’s long-term energy
stability.

On August 2, a ceremony was held in the Turkish city of Kilis to
mark the beginning of the transportation of Azerbaijani gas through
Türkiye to Syria as part of a signed agreement between SOCAR and
Syria. The first phase of the project plans to export 1.2 billion
cubic meters of natural gas per year to Syria. The gas will be
transported through the city of Kilis on the Turkish-Syrian border
to power plants in Aleppo and Homs, where it will be used to
generate electricity. This is expected to increase the total
production capacity by 1,200-1,300 megawatts.

On August 4, SOCAR Marine, part of SOCAR Türkiye and operating
in the field of maritime transportation, announced the launch of
operations for buying and selling greenhouse gas emission quotas
under the European Union Emission Trading System (EU ETS).

The new initiative aims to support ship owners, operators, and
charterers in fulfilling their carbon reduction obligations when
ships enter EU ports. Additionally, the company plans to expand the
range of services offered, including trading in biofuels, providing
services under the FuelEU initiative, and organizing joint
"pooling" solutions.

On August 18, SOCAR and the Chartered Institute of Management
Accountants (CIMA) signed a memorandum of understanding (MoU) to
develop financial and management knowledge and skills, promote
corporate governance, and accounting practices in line with
international standards, and further strengthen SOCAR's financial
functions. The project will include joint training programs,
certification initiatives, and the exchange of expertise in
relevant fields.

On September 6, SOCAR and Qatar's UCC Holding signed memoranda
of understanding, envisaging long-term cooperation in the energy
sector, including in Syria.

The memoranda cover cooperation across the entire energy value
chain—from exploration and extraction of oil and gas to the
development of transportation and storage infrastructure, refining
and petrochemicals, and the trading and supply of crude oil,
refined products, and aviation fuel. The agreements also include
the construction of highly efficient gas turbine power plants.

The document aims to accelerate the recovery of the energy
sector in Syria with the support of the governments of Azerbaijan
and Qatar. It is crucial for the country’s overall development and
includes modernization of its key energy infrastructure using
advanced technologies and standards.

The second document secures SOCAR and UCC Holding’s cooperation
in other countries and their joint projects on international energy
markets.

On September 16, SOCAR and the world’s largest transportation
company, Mediterranean Shipping Company (MSC), signed a strategic
cooperation agreement.

As part of the agreement, the parties plan to strengthen
Türkiye's position in the global supply chain by jointly investing
in the region's largest container port—SOCAR Terminal. MSC's
subsidiary and international port terminal operator, Terminal
Investment Limited (TIL), will become a shareholder of SOCAR
Terminal. This collaboration will integrate SOCAR Terminal into
TIL’s extensive global network.

On September 23, SOCAR, Italiana Petroli S.p.A, and MIP S.p.A
signed a tripartite agreement for the sale and purchase of
shares.

The agreement foresees SOCAR acquiring 99.82% of the shares of
one of Italy’s leading energy companies, Italiana Petroli (IP),
from API Holding. The deal is expected to be finalized in the first
quarter of 2026, pending completion of standard closing procedures
and necessary regulatory approvals.

On October 2, SOCAR and Schlumberger signed a partnership
agreement to accelerate the redevelopment of the Bahar and
Gum-Deniz fields in the Caspian Sea.

The partnership includes the identification of prospective
production zones, comprehensive reservoir modeling, as well as the
design of drilling programs and wells to support the Early
Production Scheme (EPS) at these fields. The project is a key part
of SOCAR's long-term strategy to increase oil production and extend
the lifespan of mature offshore assets. This initiative is aimed
not only at ensuring operational efficiency and sustainability but
also at developing practical scenarios to accelerate
production.

On October 3, SOCAR and Uniper signed a cooperation program for
2025–2026.

On October 10, SOCAR’s Azneft Production Union, Kranji Solution,
and MySep Pte signed a memorandum of understanding.

The document outlines plans to modernize separators used in oil
and gas collection and transportation systems in Azneft’s
structures. Additionally, 10 employees will undergo specialized
training. As a result, separator design, troubleshooting,
compliance checks, and capacity upgrades will be carried out by
local specialists independently, minimizing risks of complications
in collection and transportation systems.

On October 20, for the first time in the company's history,
SOCAR launched an electronic version of the "Work Permit"
system.

The system combines planning, risk assessment, and monitoring of
work processes on a unified digital platform. This ensures full
compliance with safety requirements, efficient use of resources,
and prompt decision-making. The "Work Permit" system was first
implemented electronically at SOCAR’s Absheronneft management unit
within Azneft. The project is based on work control principles and
ensures coordinated, controlled execution of all tasks in
accordance with established rules.

Along with the launch of the electronic "Work Permit" system,
mechanisms for energy system isolation (LOTO) were also
updated.

On October 20, SOCAR, M-Gas, and the municipality of the
Bulgarian city of Ruse opened the second facility within the Hybrid
Gasification project. The "Prolet" kindergarten in Chervena Voda
village, Ruse municipality, is now heated with environmentally
friendly natural gas. This significant step marks the second phase
of the long-term Hybrid Gasification of Public Buildings
Project.

The project’s primary goal is to improve energy efficiency and
reduce harmful emissions by 30% through replacing diesel fuel
heating with cleaner natural gas. The kindergarten’s nearly
50-year-old heating system (from 1977) was entirely replaced with a
modern, highly efficient one.

As a result of the modernization, M-Gas and its partners reduced
heating costs by 50% and improved comfort for 180 children and
staff members. The investments cover the full cycle of designing
and building a compressed natural gas (CNG) installation, a new
heating system, including a modern boiler house with two
high-efficiency condensing gas boilers. The installed boiler remote
control system will provide an additional 20% savings in natural
gas.

On October 27, SOCAR and Uzbekneftegaz (Uzbekistan) signed a
memorandum of understanding aimed at developing cooperation in the
application of artificial intelligence in the oil and gas
industry.

The partnership includes the implementation of SOCAR’s AI-based
solutions, sharing expertise and specialists, offering consultation
services in digital transformation, digitalization of production
processes, and increasing efficiency, as well as in information
technology.

The parties plan to carry out AI-based projects focused on
boosting diesel fuel production by optimizing blending parameters,
developing a Large Language Model (LLM) to support operational
teams, and creating "Seismic AI" and ENOM solutions for automating
geological and energy data analysis. Additionally, SOCAR will
provide consultation on the ODLAR and Daily Drilling projects,
which aim to create a unified information architecture connecting
all company business processes and fully digitize and visualize
seismic and drilling data.

On November 7, SOCAR and the Chinese Sinopec Engineering company
signed a framework agreement for cooperation.

On November 12, SOCAR Green LLC, the Ministry of Energy of
Azerbaijan, and China Datang Overseas Investment Co. Ltd. signed an
agreement for the assessment, development, and implementation of a
100 MW solar power plant project in Azerbaijan.

On December 1, deliveries of Azerbaijani natural gas to private
and industrial consumers in North Macedonia began. The supply was
established thanks to productive cooperation between SOCAR, M-Gaz,
and CNG Systems. This pilot project expands the virtual
gasification initiative that started in Bulgaria in 2024.

The project, implemented in partnership between SOCAR, M-Gaz,
and CNG Systems, began with the supply of compressed natural gas
(CNG) to industrial and private consumers not connected to the
pipeline or distribution network. SOCAR, through M-Gaz, ensures the
required volume of natural gas for CNG Systems, which then supplies
industrial and private consumers in Strumica. A gas distribution
network has been built in the city, powered by compressed natural
gas. As a result of this partnership, Azerbaijani natural gas is
now used to heat and provide hot water to six kindergartens, eight
schools, one hospital, several administrative buildings in
Strumica, as well as more than 400 households and some industrial
consumers.

On December 5, SOCAR and Qatar’s UCC Holding signed a Memorandum
of Understanding for the supply of fuel to Damascus International
Airport. According to the document, the parties plan to create a
joint venture that will supply aviation fuel to Damascus
International Airport and provide the necessary infrastructure.
SOCAR will be responsible for the technical support of fuel supply
operations and ensuring its timely delivery.

On December 10, an agreement was signed for the supply of
natural gas between SOCAR and MVM ONEnergy, which will come into
force on January 1, 2026.

On December 17, SOCAR and Hungarian MOL Group signed a product
sharing agreement for exploration and production in the
Shamakhi-Gobustan area. MOL Group will be the operator with a 65%
share, and SOCAR will hold a 35% share. The project will begin with
seismic surveys in early 2026, followed by drilling at a later
stage.

On December 17, a memorandum of cooperation was signed between
SOCAR's Complex Drilling Works Trust (CDWT) and Bahar Energy
Operating Company (BEOC). The memorandum covers the extensive
experience of CDWT in complex drilling works at the Bahar and
Gum-Deniz fields.

On December 23, SOCAR signed a contract for the acquisition of
the Gama Enerji İç Anadolu power plant (870 MW) in Türkiye for $225
million.

Structural changes

On August 5, the State Tax Service under the Ministry of Economy
carried out the state registration of two companies—SOCAR Zone I
and SOCAR BTBK—under SOCAR. Both companies have a legal form of
limited liability companies (LLC) with a charter capital of 1,000
manat ($588) each.

On August 19, President of Azerbaijan Ilham Aliyev signed a
decree regarding the implementation of the "Licensing and Permits"
law and the regulation of related issues. According to the decree,
SOCAR must, in accordance with the law, create separate legal
entities for the transportation, distribution, storage, wholesale
and retail sale, as well as import of gas, by January 1, 2027.
These legal entities must implement progressive corporate
governance principles, including the establishment of supervisory
boards, and inform the head of state about this.

Expansion of the gas station network

On February 6, SOCAR opened its first gas station (GS) in Shusha
city. The new GS, located on one of the busiest highways—the
Shusha-Khankendi-Lachin road—is equipped with three fuel
dispensers. The station offers RON-92, RON-95, RON-98 gasoline, as
well as diesel fuel.

On December 30, SOCAR opened three new gas stations in Romania
under the SOCAR brand.

These new stations, commissioned by SOCAR's Romanian subsidiary,
SOCAR Petroleum SA, are located in the regions of Salaj, Suceava,
and Satu Mare. As a result, the total number of SOCAR gas stations
in the country reached 91. All SOCAR gas stations, including the
new ones, offer Nano 95 and Nano 98 gasoline and Nano Diesel and
Nano Super Diesel fuel.

By 2026, SOCAR plans to exceed 100 gas stations in Romania.

Ratings and forecasts from international rating agencies

In July, Moody's Ratings upgraded SOCAR's rating to investment
grade, assigning a long-term issuer rating of Baa3, and withdrew
the Ba1 corporate family rating, as well as the Ba1-PD probability
of default rating.

"The upgrade of the sovereign rating is linked to the
improvement in institutional effectiveness, supported by the long
experience of maintaining macroeconomic stability amidst recent
shocks and oil price fluctuations. Ongoing regulatory reforms have
strengthened the stability of the banking sector, and the continued
commitment to reducing the budget's dependence on hydrocarbon
revenues enhanced fiscal resilience. Azerbaijan also made progress
in economic diversification, aided by rapid growth in the transport
sector. As a result, SOCAR’s operating and macroeconomic
environment improved, and the state’s financial capacity to support
the company, if necessary, increased, which is credit-positive for
SOCAR," said the rating agency.

According to Moody’s forecasts, SOCAR will maintain proven
reserves of 1.4 billion barrels of oil equivalent (BOE) in both
2025 and 2026.

Moody’s expects that SOCAR’s average daily production will be
269,000 barrels of oil equivalent per day (MBOE/d) in 2025, a
decrease of approximately 2.2% compared to 2024. Production is
expected to decline further by 1.9% in 2026, reaching 264,000
barrels per day. Overall, compared to 2020 (380,000 barrels per
day), SOCAR’s production in 2026 (264,000 barrels per day) will be
approximately 30.5% lower.

On November 13, S&P Global Ratings raised SOCAR’s long-term
credit rating from BB- to BB, noting a significant improvement in
the company’s financial policy transparency and disclosure level.
The outlook for the rating is "Stable".

S&P stated that in recent months, SOCAR has shown
significant progress in data disclosure and communication with
rating agencies, improving the visibility of the company's
performance indicators.

S&P raised SOCAR’s individual credit profile (SACP) rating
from "b" to "bb-", which in turn led to a revision of the company's
overall rating and its senior unsecured debt rating. The agency
expects SOCAR to maintain a managed level of liquidity, supported
by significant cash reserves, and to provide stable operational
results, with the funds from operations (FFO) to debt ratio
remaining above 12%.

According to S&P Global Ratings, SOCAR’s financial
performance will maintain relative stability in the coming years,
although there will be limited room for improvement. The agency
expects SOCAR’s EBITDA from 2025 through 2027 to decline to 5.5-6
billion manat ($3.24–3.53 billion), compared to 6.7 billion manat
($3.94 billion) in 2024.

At the same time, operational cash flows (FFO) are expected to
remain stable overall, due to reduced tax burdens and a slight
decrease in interest expenses. This will allow SOCAR to maintain
the FFO-to-debt ratio within the 12-15% range under the agency’s
base scenario. According to the agency's estimates, SOCAR's
adjusted debt under the S&P Global Ratings methodology will
remain high—around 27.5-28 billion manat ($16.18–16.47 billion),
despite moderately positive free operational cash flow (FOCF) of
approximately one billion manat ($588 million).

Given that Upstream is the primary source of SOCAR's EBITDA and
constitutes the core of its operations, S&P expects an increase
in investments in the development of new fields or the expansion of
existing projects. To reflect these expected investments, the
agency includes about $3 billion manat ($1.76 billion) in capital
expenditures annually in its base forecast, which is higher than
the investment level of the past two years. S&P emphasizes that
nearly completed projects such as Shah Deniz-2 and the Shah Deniz
Compression project, signed earlier this year, demonstrate SOCAR’s
ongoing efforts to increase production and strengthen its
production capacity through further investments in the Upstream
segment.

On November 24, Sustainable Fitch assigned SOCAR an ESG rating
(Environmental, Social, and Governance) of 3 with an overall score
of 41.

This result reflects the company’s average level of ESG
performance, where its strengths—reliable risk management and
emission reduction goals—are balanced by ongoing challenges in
environmental impact, diversification, and corporate governance
transparency.

On December 25, S&P Global Ratings revised its outlook for
SOCAR’s credit rating from "Stable" to "Positive", confirming the
rating at "BB".

This decision reflects the very high likelihood of state support
for SOCAR and follows a similar improvement in the sovereign rating
outlook for Azerbaijan.

S&P emphasized that the positive outlook is driven by
several factors. First, the significant reduction in tensions
between Azerbaijan and Armenia, amid progress toward a peaceful
settlement and reduced defense spending in the 2026 budgets of both
countries. These changes have reduced the risks of conflict renewal
and, if maintained, are likely to support investor confidence and
promote more sustainable medium-term economic growth through
improved regional trade and transport links in the South
Caucasus.

Plans until 2050

SOCAR is preparing to launch its largest seismic program in the
company's history in 2026, to more accurately map reserves at
mature fields.

By 2030, the company plans to completely eliminate routine
flaring of associated gas and reduce the emissions intensity of its
Upstream segment by 30%.

By 2035, SOCAR expects to achieve a 30% reduction in carbon
intensity and reduce absolute emissions by 20%.

To implement these goals, SOCAR has developed three key
strategies:

- decarbonization roadmap covering all of the company's
operations;

- structural transformation and the creation of a dedicated
segment for energy transition, ecology, and decarbonization;

- expanded international cooperation, including participation in
global initiatives and systematic measurements of methane and
carbon emissions.

By 2050, SOCAR aims to achieve net zero emissions.

Starting in 2026, SOCAR will implement a comprehensive digital
emissions monitoring system across all operations. The company has
already started cooperating with ENABLON and has purchased a
monitoring, reporting, and verification system designed for
accurate measurement and tracking of environmental performance.