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Azerbaijan: Shared Segment of Exploration, Production, and Technology Transfer
Ustyurt is gaining new momentum: on July 24, 2025, the Ministry of Energy of Uzbekistan, SOCAR, and Uzbekneftegaz signed a production sharing agreement (PSA), moving cooperation between Tashkent and Baku from memoranda to actual geological exploration with a clearly defined work schedule – including 3D seismic surveys covering at least ~1,000 km² and a minimum of one exploratory well within a five-year framework. SOCAR has been appointed as the operator of the geological exploration stage. For Uzbekistan, this is a rare case where a resource base is simultaneously linked to both capital and the expertise of a national company with Caspian experience, covering work design, subsurface risk management, and project control standards. The practical outcome is what can be called “smart barrels”: more data before drilling, less uncertainty in reserve estimation, and therefore lower project financing costs and more apparent development horizons. If geological findings are confirmed, the PSA will automatically pave the way to industrial-scale production, enhancing the resilience of Uzbekistan’s energy portfolio and strengthening its technological autonomy.
Kazakhstan — the “Green Bridge” Across the Caspian
An idea that not long ago looked like a sketch on a napkin has now taken on the shape of a real project. In May 2024, Azerbaijan, Kazakhstan, and Uzbekistan agreed to connect their power systems to construct a high-voltage cable along the Caspian seabed – a “green bridge” for exporting renewable energy-generated electricity to Europe. Industry media confirmed this development: the energy ministers of the three countries agreed to establish energy interconnection and to study the marine segment that will link Central Asia to the Caucasus-Anatolian energy corridor.
Within a year, the initiative gained a financial backbone. On April 5, 2025, the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) signed a memorandum with the three countries to finance the feasibility study (FS) and the legal framework for cross-border electricity trade. In parallel, international institutions allocated grants and technical support for project preparation. This transition moves the initiative from the political to the engineering and financial domain, introducing a work schedule, route assessments, and grid and power flow requirements. Why does this matter for Uzbekistan? The “Green Bridge” provides access to long-term financing for wind and solar capacity development and grid modernization, enhances the flexibility of the national power system through interconnections, and opens a new export channel for clean energy. Most importantly, it reduces technological and regulatory risks: financing is tied to grid reliability standards and transparent trade rules, which are critical for accessing EU energy markets.
Kyrgyzstan – The CKU Railway as the “Eastern Corridor”
On June 6, 2024, China, Kyrgyzstan, and Uzbekistan signed an intergovernmental agreement on the China – Kyrgyzstan – Uzbekistan (CKU) railway, a project that will provide Uzbekistan’s logistics network with a direct “eastern corridor” and connect it to the Middle (Trans-Caspian) Corridor leading to Türkiye and the European Union. The agreement was signed in Beijing in the presence of the leaders of the three countries via a video conference. The document establishes the framework for design, construction, financing, and subsequent operation of the railway line.
In 2025, Kyrgyzstan transitioned from planning to implementation, with preparatory and mountain works commencing, including tunnel excavation on the Kyrgyz segment. At the end of August, the official construction launch took place along the Kosh-Dobo route. This marks a practical step toward eliminating one of Central Asia’s long-standing logistical bottlenecks – the lack of an alternative to the Kazakh transit route.
Why is this important for Uzbekistan? The CKU railway shortens the route to East Asian and European markets, reduces the number of interchanges and border crossings, minimizes transit delays, and consequently lowers the overall transportation costs for exporters. When combined with the Trans-Caspian corridor, the CKU route provides Uzbekistan with another “gateway to the sea”, serving as both a diversification tool and insurance against disruptions on alternative transit paths.
Türkiye — A Stable Anchor of Trade
From January to August 2025, trade turnover between Uzbekistan and Türkiye reached $1.91 billion, confirming Ankara’s position among Tashkent’s key trading partners by volume of mutual trade. This figure is based not on one-off transactions, but on sustainable supply chains – including machinery and equipment, textiles and yarn, agro-processing products, chemicals, and components. Amid Uzbekistan’s overall growth in foreign trade (January-August: $51.4 billion, up 19.8% year-over-year), the Turkish vector serves as a stabilizing driver of demand and a channel for rapid business cooperation.
Why does this matter? A predictable “anchor” market reduces commercial risks for exporters, while close industrial cooperation – from joint localization of components to service provision – increases the “throughput capacity” of industrialization in Uzbekistan. Simply put, the shorter the “agreement – shipment – payment” cycle in trade with Türkiye, the faster projects reach payback, and the stronger investors’ confidence grows in launching new production lines in the region.
Hungary — A Simple Case That Explains a Lot
In 2023, a major European player entered Uzbekistan’s financial sector: OTP Group acquired 73.71% of Ipoteka Bank, becoming the first foreign bank to participate in Uzbekistan’s privatization process. The deal was finalized on June 13, 2023; along with the bank, OTP also took control of its subsidiaries – a leasing company and an insurance company. The IFC retained its share and pledged to continue the bank’s transformation in partnership with OTP.
Over two years, the results have been tangible. On June 30, 2025, Fitch upgraded Ipoteka Bank’s rating to BB with a stable outlook, noting the improvement in its profile thanks to the parent group’s support. Since January 13, 2025, the bank has been officially integrated into the OTP Bank Resolution Group, gaining access to the group’s systemic infrastructure – capital, risk management, and compliance. By mid-2025, the bank had already positioned itself as Uzbekistan’s largest private bank by capital.
On May 20, 2025, Uzbekistan and Hungary elevated their relations to an enhanced strategic partnership, reinforcing investor confidence and lowering the cost of borrowing for local businesses.
Why does this matter for Uzbekistan? It ensures simpler and faster access to long-term financing, introduces European-standard risk management, and creates a real channel for new capital inflows – from SMEs to industrial projects.
Turkmenistan (Observer) – The Strengthening of the “Southern Corridor”
According to the latest data, mutual trade between Uzbekistan and Turkmenistan reached $677.8 million from January to August 2025. Just a month earlier, from January to July, the figure stood at $586.6 million, confirming an acceleration in late summer. The primary driver behind this growth is the removal of trade barriers. On February 25, 2025, the Free Trade Agreement between the two countries came into force, eliminating customs duties on most goods and expanding the “corridor” for mutual trade and supply. This progress is further supported by local initiatives, such as the creation of the Shovot – Toshovuz border trade zone and the expansion of industrial, transportation, and agricultural cooperation. In practice, this transforms the Turkmen route into a stable “southern corridor” within Uzbekistan’s logistics network.
Why is this important? Amid growing congestion along northern routes, the increase in transit through Turkmenistan provides Uzbekistan with risk diversification and a more direct path to Middle Eastern and South Asian markets (in connection with the Caspian-Caucasus and Iranian routes). For businesses, this means fewer transshipment points, lower transaction costs, and more predictable delivery times, resulting in better return-on-investment calculations for export-oriented projects.
Turkish Republic of Northern Cyprus (Observer) – A Window to the Eastern Mediterranean
The observer status of the Turkish Republic of Northern Cyprus (TRNC) in the Organization of Turkic States is expanding humanitarian, educational, and tourism ties, while adding new instruments for service-sector cooperation in tourism, education, and healthcare. For Uzbekistan, this represents a “soft track” of diversification.
Why is this important? A broader network of contacts makes it easier to build service value chains and promote educational and tourism products across new markets.
Instruments of the Organization of Turkic States (OTS)
Turkic integration already has a set of practical “keys” that save weeks along transport routes and reduce logistics costs by percentages.
First, the Simplified Customs Corridor. The agreement, signed at the Samarkand Summit on November 11, 2022, entered into force on November 29, 2024. Its purpose is to establish end-to-end digital data exchange between customs administrations, unify notifications, and reduce manual operations at border crossings. For businesses, this means predictable delivery times and fewer unplanned delays for trucks and containers.
Second, the digitalization of road transport. The Budapest Declaration of May 21, 2025, explicitly supports the integration of the e-Permit system across the OTS space in accordance with the Memorandum signed on July 6, 2024, in Shusha, while also welcoming the entry into force of the Simplified Customs Corridor. This effectively moves electronic permits from pilot projects to a common standard, eliminating lengthy paper-based procedures and further streamlining cross-border logistics.
Third – Financing. The Turkic Investment Fund (TIF) is the first joint financial institution established by the member states of the Organization of Turkic States (OTS). The agreement on its establishment entered into force on February 24, 2024, followed by the Host Country Agreement (Türkiye) in November 2024. The Fund’s authorized capital amounts to $600 million. In 2025, the TIF began developing its institutional policies and financial products, providing long-term financing for SME cooperation projects, as well as initiatives in transport, logistics, and energy.
Taken together, these instruments function as an integrated system: digital corridors + unified permits + accessible financing. The result – less friction at borders, a shorter “contract → shipment → payment” cycle, and a faster transition from project presentations to construction sites. In other words, when borders are efficient and capital is available, project launch speed increases, and investor risk decreases.
Bonus Framework: The “Here and Now” Effect
According to official data, Uzbekistan’s foreign trade turnover in January-August 2025 amounted to $51.4 billion, an increase of 19.8% year-on-year, with exports reaching approximately $23 billion (+31.3%). The more seamless the Turkic transport corridors become and the more actively the Turkic Investment Fund (TIF) engages, the easier it is to convert this momentum into stable export markets and long-term investments – spanning textiles, mechanical engineering, green energy, and logistics.
Abduaziz Khidirov, UzA