Both parties will develop potential prospects in the shallow water area around the peninsula in the Azerbaijan sector of the Caspian Sea.
The PSA is part of the Azerbaijan Government’s plan to ensure that all of the country’s offshore areas are fully explored.
The PSA area extends along the Caspian basin margins to the south of the Absheron Peninsula.
The acreage has water depths of approximately 40m, with potential reservoir depths of 3,000m to 5,000m.
SOCAR president Rovnag Abdullayev said: "The signing of this new PSA, which clearly deepens our partnership with BP, is an important milestone for all parties involved – the government, SOCAR and BP.
"It marks the beginning of a new phase in our cooperation. This phase will enable us to work together to ensure the long-term future for Azerbaijan’s oil and gas production through exploring new opportunities."
BP regional president for Azerbaijan, Georgia and Turkey Gordon Birrell said: "This new partnership is based on BP’s extensive experience in responsibly exploring and developing in shallow water areas around the world and our expertise in using the best technology available in the industry."
SOCAR is involved in exploring oil and gas fields, producing, processing and transporting oil, gas and gas condensate in Azerbaijan.
The company markets petroleum and petrochemical products in domestic and international markets, and delivers natural gas to the industry and the public.