Geological Exploration of Hydrocarbons in Uzbekistan

Geological exploration of hydrocarbons is regulated by the Law “On Subsoil” and is carried out on the basis of a permit issued by the Subsoil Use Center. Any authorized person may apply on a “first come – first served” basis for no more than 5,250 adjacent open cadastral squares. The application must include information about the applicant, a description of the subsoil plot, the planned types of work, and other data established by law. The decision to issue or refuse a permit is made within the statutory deadlines, and if granted, the permit is registered in the State Subsoil Fund Cadastre Register.

Term of Validity and Extension

The permit for geological exploration of hydrocarbons is issued for a period of up to five years. At the request of the subsoil user, it may be extended once for up to four years, with the number of cadastral squares in the permit being reduced by 50%.

Rights of Subsoil Users

A subsoil user holding such a permit has exclusive rights to:

• Conduct surveys and reconnaissance works to discover hydrocarbon deposits, assess their quality and scale.
• Carry out drilling and pilot-industrial operations for testing and experiments.
• Collect and export hydrocarbon and water samples from the subsoil plot.

Financial Obligations

There are annual minimum expenses for geological exploration of hydrocarbons, calculated on the basis of the base calculated value (BCV) in force as of January 1 of the reporting year. If the permit is issued or terminated during the year, the expenses are calculated proportionally to the number of full months it was in effect. Failure to meet obligations requires payment of the missing funds and submission of a report to the Subsoil Use Center within two months after the end of the year.

Exploration During Production

Even with an active hydrocarbon production permit, geological exploration may be carried out to refine the structure and reserves of the deposit. The Subsoil Use Center must be notified at least one week before the start of the works. Discovery of a new deposit is formalized as an addition to the development project, but does not extend the production term.

Stages and Key Conditions of Hydrocarbon Exploration

Stage / Parameter	Content	Regulatory Basis	Terms / Restrictions	Practical Comments and Risks
Obtaining a Permit	Application to the Subsoil Use Center on a “first come – first served” basis or through auction/tender. Up to 5,250 adjacent open cadastral squares.	Art. 70 of the Law “On Subsoil”	Consideration within statutory time limits.	Important to monitor open cadastral squares in advance; delays may lead to losing a promising plot.
Validity Period	Permit valid for up to 5 years.	Art. 73	Single extension for up to 4 years, area reduced by 50%.	When extending, pre-select the most promising squares; risk of losing part of the territory.
Reconnaissance	Initial geophysical, geochemical, seismic studies of the plot.	Arts. 69, 70	Within the term of the permit.	Reduces the risk of “blind drilling,” but requires quality budget planning.
Prospecting	Identification of promising structures, drilling of prospecting wells.	Art. 78	—	Main risk: high costs with uncertain results; geological exploration insurance recommended.
Exploration	Detailed reserve assessment, preparation of report.	Arts. 78, 89	—	At this stage, attracting investors is possible; errors in assessment may affect the entire project economy.
Hydrocarbon Evaluation	Determining recoverable reserves, economic feasibility assessment.	Art. 92	—	Errors in forecasts may lead to unprofitable production; independent data audit is recommended.
Pilot-Industrial Production	Trial production to test technologies and refine parameters.	Art. 78	—	May reveal unexpected technical problems; adjustments to the development plan should be foreseen.
Financial Obligations	Annual minimum expenses calculated based on BCV as of Jan 1.	Art. 77	Proportional to permit term within the year.	Failure to meet expenses requires additional payments and may entail fines; cost control is essential.
Exploration During Production	Refinement of structure and reserves allowed with valid production permit, notification required.	Art. 89	Notify at least 1 week in advance.	Offers a chance to discover new deposits but does not extend production term; timely planning is key.
Reporting	Final report with primary data, processed materials, core samples.	Arts. 70, 77	If additional processing is needed – within 6 months after permit expiry.	Late submission may lead to refusal of extension or new permits.

 

Permit for Hydrocarbon Reconnaissance

Reconnaissance is the initial geological, geophysical, and geochemical survey to identify hydrocarbon indicators without full-scale exploration or production. The law specifically includes seismic, gravimetric, magnetic, electrical, and electromagnetic methods, as well as shallow drilling up to 300 m.

Key Limitation: The presence of a reconnaissance permit does not grant the subsoil user any preferential right to subsequently obtain a permit for geological exploration or production on the same plot.

Term and Extension

The permit is issued for up to 3 years from the date of registration. It may be extended once — for up to 1 year — upon the subsoil user’s request and compliance with legal conditions. If the first or last year is incomplete, the minimum expenses are calculated proportionally to full months.

Minimum Annual Expenses

The subsoil user must comply with annual minimum spending requirements for reconnaissance. The basic approaches are set by law, and the calculation is tied to the BCV as of January 1 of the reporting year.

Subsoil User’s Obligations: Project, Approvals, Permits

Within 30 days after issuance, the user must submit to the Subsoil Use Center a comprehensive reconnaissance project for the entire permit term. Before starting work, all necessary permits must be obtained, state environmental expertise completed, and approval from the Inspectorate for Mining and Geology Control secured.

Minimum Project Content:

• Purpose and nature of work
• Methods and proposed equipment
• Minimum planned expenditure
• Preliminary decommissioning plan (if necessary)

Economic Rights to Results

The subsoil user has the right, at their own expense, to prepare and sell the results and reports from the interpretation of geological and other studies carried out on the reconnaissance site and to earn income from such sales.

Practical Roadmap (Compliance Algorithm)

• Prepare the application and evidence of technical, financial, and personnel readiness.
• Obtain reconnaissance permit (max. 3 years).
• Within 30 days, submit a comprehensive project; plan for environmental review and Inspectorate approvals.
• Ensure minimum annual spending (BCV-based) and proper documentation.
• Conduct fieldwork strictly within project and permits; minimize impact; prepare reports/data.
• If necessary, request one extension (up to 1 year) in advance.
• Complete work and submit final materials; plan next steps (separate permit required for exploration/production — no automatic priority).

Typical Risks and How to Prevent Them

• Missing 30-day project submission deadline — set an internal deadline at T+20 days.
• Underperformance on minimum annual spending — quarterly plan-vs-actual monitoring and 10–15% year-end reserve.
• Starting fieldwork without environmental approval/permits — strict “gate” procedure before commencing work.
• Incorrect assumptions about “priority rights” — communicate clearly to investors: reconnaissance does not create preferential rights for further stages.

Recommended Structure of a Comprehensive Project

• Executive summary and work map
• Geological problem statement
• Methodological solutions (seismic/magnetic/geochemistry/drilling ≤300 m)
• HSE and environmental procedures plan
• Schedule and budget (linked to BCV)
• Decommissioning and data/sample handling plan (if necessary)