Azerbaijan Ratifies Gran Tierra's 65% Guba-Caspian Oil PSA

President Ilham Aliyev has approved the law ratifying a production sharing agreement (PSA) under which Gran Tierra Energy will explore an onshore area spanning parts of five districts of Azerbaijan, Trend reported on 12 October 2026. The Calgary-headquartered company is operator of the Guba-Caspian contract area with a 65% participating interest, working with the State Oil Company of the Republic of Azerbaijan (SOCAR).

The law covers the agreement between SOCAR, Gran Tierra Energy (Azerbaijan) GmbH and SOCAR Guba-Caspian LLC for territory in the Guba, Gusar, Shabran, Siyazan and Khizi districts, and its text was published on the president's official website. The Milli Majlis, Azerbaijan's parliament, adopted the bill in a single reading on 30 September 2026, according to Trend's report from the plenary session. The package also approved a government guarantee and 10 addenda to the main agreement.

The approval moves Gran Tierra's Azerbaijani block closer to fieldwork and adds to a run of onshore exploration deals signed by SOCAR while output from the country's main offshore oil block eases. For Gran Tierra, which produces in Canada, Colombia and Ecuador, the block carries extra weight, because the company says that once the sale of its Colombian and Ecuadorian businesses is completed, its operations will focus on Canada and Azerbaijan.

What the agreement covers

SOCAR President Rovshan Najaf and Gran Tierra chief executive Gary Guidry signed the PSA in Baku on 18 February 2026, following a memorandum of understanding between the companies in June 2025, Interfax reported. CBJ covered the original signing. SOCAR said the exploration programme would include gravimetric data collection, 3D seismic surveys and exploration wells to assess the area's hydrocarbon potential. If commercially viable reserves are found, the agreement provides for development and production under a production sharing model, according to the parliamentary presentation reported by Trend. Fiscal terms, including the division of profit oil, have not been published.

Gran Tierra has already started work. In a statement dated 5 October 2026, it said it had finished flying an airborne digital full tensor gradiometry survey over the area, covering 4,815 square kilometres along 102 lines and 5,775 line kilometres. The company said the data would help map sedimentary basins and fault structures that could trap oil and gas, and would be combined with existing seismic and well data to select future seismic areas and drilling locations. Its statement refers to the contract area as the Guba-Khazaryani region.

An onshore push as offshore output eases

The ratification follows SOCAR's PSA with ExxonMobil for unconventional resources in the Middle Kura Basin, announced on 26 September 2026, under which each company holds 50% and ExxonMobil is operator, according to Trend (see CBJ's report on the Middle Kura deal). Najaf said in March that Azerbaijan was beginning to develop onshore unconventional resources alongside its offshore fields.

Output from the offshore base is falling. The Ministry of Energy reported that Azerbaijan produced 6.6 million tonnes of oil and condensate in January to March 2026, down 4.3% year on year, with the Azeri-Chirag-Gunashli (ACG) block contributing 3.9 million tonnes, down 2.5%, Interfax reported. bp Azerbaijan told AZERTAC that ACG averaged about 323,000 barrels per day in the first half of 2026.

What to watch

• The effective date. Interfax reported in February that the agreement would enter into force after parliamentary ratification, while Gran Tierra's 5 October statement still lists a possible delay in effectiveness among its risks.
• Interpretation of the gradiometry data and the choice of seismic acquisition areas, which will shape the size and timing of any drilling programme.
• Completion of Gran Tierra's sale of its Colombian and Ecuadorian businesses, which would leave Azerbaijan as one of its two operating regions.
• Geological risk. The company itself cautions that exploration may not lead to commercial discoveries, and no resource estimate for the area has been disclosed in the documents reviewed by CBJ.

Sources: Trend, 12 October 2026; Trend, 30 September 2026; Gran Tierra Energy via SEC filing, 5 October 2026; Interfax, 19 February 2026; World Oil, 23 February 2026; Trend, 26 September 2026; Interfax, 13 April 2026; AZERTAC, 6 August 2026