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2018 full year results

Release date; 13 February 2019

Azeri-Chirag-Deepwater Gunashli (ACG)

ACG participating interests are: BP (30.37 per cent), SOCAR (25.0 per cent), Chevron (9.57 per cent), INPEX (9.31 per cent), Equinor (7.27 per cent), ExxonMobil (6.79 per cent), TPAO (5.73 per cent), ITOCHU (3.65 per cent), ONGC Videsh Limited (OVL) (2.31 per cent).

 

BP Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.

 

In 2018, we spent about $505 million in operating expenditure and $1,150 million in capital expenditure on ACG activities.


Production


During the year, ACG continued to safely and reliably deliver stable production. Total ACG production for the full year was on average 584,000 barrels per day (b/d) (about 213 million barrels or 29 million tonnes in total) from the Chirag (46,000 b/d), Central Azeri (154,000 b/d), West Azeri (126,000 b/d), East Azeri (97,000 b/d), Deepwater Gunashli (105,000 b/d) and West Chirag (57,000 b/d) platforms.

 

At the end of the year, 117 oil wells were producing, while 44 wells were used for water and 7 for gas injection.


Drilling and completion


In 2018, ACG completed 14 oil producer wells and 3 water injectors.


Associated gas


In 2018, ACG delivered an average of about 6.4 million cubic metres per day of ACG associated gas to SOCAR (2.3 billion cubic metres in total), primarily at the Sangachal Terminal but also to SOCAR’s Oil Rocks facility. The remainder of the associated gas produced was re-injected for reservoir pressure maintenance.

Sangachal terminal

In 2018, oil and gas from ACG and Shah Deniz continued to flow via subsea pipelines to the Sangachal Terminal.

 

The daily capacity of the Terminal’s processing systems is currently 1.2 million barrels of crude oil and about 55 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 75 million standard cubic metres per day.

 

During the year, the Sangachal terminal exported about 284 million barrels of oil. This included around 255 million barrels through Baku-Tbilisi-Ceyhan (BTC), about 28 million barrels through the Western Route Export Pipeline (WREP), and 1.3 million barrels via a separate condensate export line.

 

Gas is exported via the South Caucasus Pipeline (SCP) and via SOCAR gas pipelines connecting the Terminal’s gas processing facilities with Azerigas’s national grid system.

 

On average, about 28.4 million standard cubic metres (more than 1003 million standard cubic feet) of Shah Deniz gas was exported from the Terminal daily in 2018.

Baku-Tbilisi-Ceyhan (BTC)

The BTC Co. shareholders are: BP (30.1 per cent); AzBTC (25.00 per cent); Chevron (8.90 per cent); Equinor (8.71 per cent); TPAO (6.53 per cent); Eni (5.00 per cent); Total (5.00 per cent), ITOCHU (3.40 per cent); INPEX (2.50 per cent), ExxonMobil (2.50 per cent) and ONGC (BTC) Limited (2.36 per cent).

 

In 2018, BTC spent approximately $116 million in operating expenditure and about $41 million in capital expenditure.

 

Since the 1,768km BTC pipeline became operational in June 2006 till the end of 2018, it carried a total of about 3.12 billion barrels (around 417 million tonnes) of crude oil loaded on 4,085 tankers and sent to world markets.

 

During the year, BTC exported about 255 million barrels (around 34 million tonnes) of crude oil loaded on 327 tankers at Ceyhan.

 

The BTC pipeline currently carries mainly ACG crude oil and Shah Deniz condensate from Azerbaijan. In addition, other volumes of crude oil and condensate continue to be transported via BTC, including volumes from Turkmenistan, Russia and Kazakhstan.

Shah Deniz

Shah Deniz participating interests are: BP (operator – 28.8 per cent), TPAO (19.0 per cent), AzSD (10.0 per cent), SGC Upstream (6.7 per cent), PETRONAS (15.5 per cent), LUKOIL (10.0 per cent) and NICO (10.0 per cent).

 

In 2018, Shah Deniz spent more than $578 million in operating expenditure and more than $1.44 billion in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.


Production


During the year, the Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan, Georgia, Turkey and to BTC Company in multiple locations.


In 2018, the field produced 11.5 billion standard cubic metres (bcm) of gas and more than 2.5 million tonnes (20.5 million barrels) of condensate.


In 2018, Shah Deniz also celebrated 100 billion cubic metres of total gas production from the field since the start of operations. The milestone was achieved at the end of December, exactly 12 years after the first announcement of the start-up of commercial gas production from the field and start-up of operations of the South Caucasus Pipeline.


The existing Shah Deniz facilities’ production capacity is currently 48.0 million standard cubic metres of gas per day or around 16bcma.

 

Drilling


During 2018, Shah Deniz Alpha platform drilled and completed the SDA11 well. Also integrity jobs were conducted on SDA04 and SDA05 wells.


The Istiglal drilling rig delivered five subsea completions – two on the West Flank and three on the East South Flank. The Maersk Explorer rig drilled the SDH02A well to the final depth.


The above two rigs have already drilled 15 wells in total for Shah Deniz 2 production and subsequent ramp up, and have completed four wells on the North Flank, four wells on the West Flank and three wells on the East South Flank. Drilling operations will continue to deliver all wells required to ramp up to plateau level.

Shah Deniz Stage 2 Project

After achieving significant commissioning and completion milestones across the whole gas value chain at the beginning of the year, the Southern Gas Corridor official inauguration event was held at the Sangachal Terminal on 29 May. This was followed by the commencement of commercial gas deliveries to Turkey from the Shah Deniz 2 development project as planned on 30 June 2018.

 

On 30 July, the wing valve on the North Flank subsea well SDC-03Z was opened, marking the first production from the Shah Deniz Bravo platform. This milestone marks the very first production from a subsea well in the Caspian, a significant achievement, which has been delivered safely, below budget and ahead of schedule. The Bravo facility is now exporting gas and condensate to the onshore terminal at Sangachal.

The South Caucasus Pipeline (SCP)

The SCP Co. shareholders are: BP (28.8 per cent), TPAO (19.0 per cent), AzSCP (10.0 per cent), SGC Midstream (6.7 per cent), PETRONAS (15.5 per cent), LUKOIL (10.0 per cent) and NICO (10.0 per cent).

 

In 2018, SCP spent about $39 million in operating expenditure and about $352 million in capital expenditure.

 

The pipeline has been operational since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey.

 

SCP’s daily average throughput was more than 23 million cubic metres of gas per day during the year of 2018.

 

The SCP has a dual operatorship with BP as the technical operator being responsible for construction and operation of the SCP facilities and SOCAR Midstream Operations, as commercial operator, responsible for SCP commercial operations.

SCP Expansion (SCPX) Project

During 2018, SCPX activities continued successfully along the pipeline route across Azerbaijan and Georgia. All infrastructure across the two countries required to support first commercial gas deliveries to Turkey were completed on schedule and were ready to operate before commencement of export on 30 June.

 

The pipeline is currently supporting Shah Deniz 2 commercial deliveries to Turkey with export volumes flowing through SCPX facilities.

Exploration

Following completion of the processing and interpretation of the 3D data acquired from the Shallow Water Absheron Peninsula (SWAP) contract area, a Notice of Prospectivity was signed with SOCAR in 2018, signifying BP’s commitment to drill exploration wells in three prospective areas in shallow water Absheron.

 

Planning for the exploration wells drilling in the selected prospective areas is now ongoing. Following signature of the new production sharing agreement (PSA) for the joint exploration and development of Block D230 in April 2018, work started on the planning of a seismic acquisition programme which is expected to be conducted in 2019.

 

We are also continuing to plan the first exploration well on the Shafag-Asiman block.

 

In 2018, BP was assigned 61% participating interest in the existing onshore Gobustan PSA in Azerbaijan. As part of the assignment, BP, as operator, is planning to drill one exploration well in 2019.

People

At the end of 2018, the number of BP’s Azerbaijani national employees was 2,534 including fixed-term employees.

 

BP made a commitment in 2014 to achieve a nationalization target of 90 per cent professional staff by the end of 2018. BP is proud to have achieved that goal by mid-year primarily through development of its national staff which has resulted in nationalizing the majority of professional roles initially occupied by expatriate employees. Non-professional staff of BP in Azerbaijan is 100 percent nationalized.

 

BP will continue its efforts to optimize its learning and development programmes and will actively participate in public and private sector initiatives contributing to the development of the local talent market.

Social Investment

The success of projects in the Caspian region depends, in part, on the operators’ ability to create tangible benefits from these projects for the people of the region. To achieve this, BP and the co-venturers continue to implement major social investment projects, which include educational programmes, building skills and capabilities in local communities, improving access to social infrastructure in communities, supporting local enterprises through provision of access to finance and training, support for cultural legacy and sport, as well as technical assistance to public institutions.

 

In 2018, BP and the co-venturers in BP-operated joint ventures spent $3 million in Azerbaijan alone on social investment projects.

 

BP (on behalf of the co-venturers in the joint ventures that it operates) will continue their social investment initiatives in support of local capacity-building and enterprise development throughout Azerbaijan to assist the country in strengthening its economy.

 

Some examples of such projects in Azerbaijan are:

  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) supported a programme aimed at enhancing employment opportunities for people with disabilities in Azerbaijan. The programme called “Enhancing employability skills for people with disabilities” developed skills and capabilities of 86 selected people through trainings and other specialised activities. The project also provided psychological counselling sessions to enhance the participants’ self-confidence.
  • The Enterprise Development Programme (EDP), initiated by BP (on behalf of the co-venturers in the joint ventures that it operates), is a multi-million-dollar initiative in support of local business development. The programme is part of the efforts to increase local content of contracts in Azerbaijan and contribute to the healthy and transparent development of the local economy. In 2018, 41 companies completed the programme and additional 16 companies went through the initial appraisal.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) are supporting secondary schools in enhancing IT skills training. As part of this 3-year initiative, a new curriculum for IT specialised secondary schools is being developed in cooperation with the Ministry of Education. In addition, 50 teachers representing 25 Baku schools are being trained to pilot and effectively use the new curriculum.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) launched in September 2016 the “Build your Future” project to support a large group of 11th grade students selected from disadvantaged families in their preparation for university admission exams. The project activities include two components – academic knowledge and social integration. To date the project has had 2 successful phases with  91 per cent of participants admitted to local universities. Based on this success the project has now stepped into phase 3.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) launched a pilot project in 2016 for capacity-building in the communities along the pipeline route in Goranboy, Samukh, Shamkir, Tovuz and Agstafa districts. The project was designed to enhance the quality of English language teaching in the communities. Building on the success of the pilot phase, the project was later extended to cover up to 165 teachers and 480 community members from 11 rural districts along the pipeline route – phase 2. In December 2018, the project entered phase 3 which covers 22 English language teachers from the targeted communities who were trained during first two phases of the project and up to 330 community members from 11 regions (Agstafa, Samukh, Shamkir, Goranboy, Tovuz, Kurdamir, Hajigabul, Garadagh, Yevlakh, Ujar, Agdash).
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) have partnered with the International Organization for Migration (IOM) to support the transition of international best practices in facilitating efficient implementation of migration strategies, policies and legislation through capacity-building and technical assistance. The beneficiaries of the project are the state agencies dealing with the visa matters. As part of the project, the first e-service and Consular Reference Manual for the Ministry of Foreign Affairs has been developed and launched. In addition, capacity-building trainings have been conducted for a large group of Consular officers; an English Language laboratory was established for SMS officials and English language courses were conducted for SMS officials. The project was successfully completed at the end of 2018.
  • BP (on behalf of the co-venturers in the South Caucasus Pipeline Company) is implementing a project to build early intervention services in 13 districts along the pipeline route and beyond - Hajigabul, Kurdamir, Agdash, Ujar, Yevlakh, Samukh, Goranboy, Shamkir, Tovuz, Agstafa, Agsu, Gobustan and Shirvan. The aim of the project is to raise both community and health sector awareness of the importance of early intervention in the process of children’s development through the establishment of Early Intervention Centres at the target districts. The project is currently in phase 3 aiming to establish pre school services in 10 districts and to continue strengthening early intervention services in 12 districts and in the pre-schools in three districts.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) are supporting a livelihood generation project which initially covered 100 community members from the Yevlakh, Goranboy, Samukh and Shamkir districts by providing equipment, training and continuous consultancy in beekeeping and small farming. In December 2017, it was decided to expand the beekeeping project called “Sweet Gold” to cover additional 600 community members in two more districts along the BP-operated pipelines- Agstafa and Tovuz. This new phase is for three years - 2018-2020 and, as part of it, 60000 nectar trees will also be planted for bee-breeding.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting a new environmental project - “Green Sangachal”, which aims to help improve the environmental conditions in the neighbouring communities.  As part of the project, it is planned to establish a green yard within one of the residential areas, which will be cleaned and fertilized in preparation for planting trees.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan)  supported the establishment of the Caspian Environmental Educational Centre (CEIC) to help enhance cooperation among the Caspian littoral states in sharing information and creating database on environmental protection of the Caspian basin. An online portal has been created to improve environmental data collection, share best practices on environmental management, provide broader access to updated regional environmental data, ensure transparency and communication with the main stakeholders and encourage public participation in regional environmental activities.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting a project to support local communities in getting access to improved infrastructure. As part of this project in 2018 three kindergantens in Shamkir, Tovuz and Baku’s Garadagh districts were  renovated and two of them (Shamkir and Tovuz) were equipped  with new furniture.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) funded a one-year project to support the application of tuberculosis protocols to 11 districts and two cities - Sumgait and Ganja. The project provided 41 training sessions to overall 863 healthcare workers (doctors and nurses).
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) signed a new contract in November 2018 to start a new project to bring to the country an internationally-practiced approach to treatment of people with Autism Spectrum Disorder (ASD) to help them integrate into society, adapt to mainstream education, engage them in professional work environment and prepare them for family life.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) funded “FIravan” project which was completed in August 2018. The project aimed to help  10 farmer groups in 10 villages of three target districts (Samukh, Yevlakh and Ujar)  increase their farm production and overall  income via capacity-building and equipment support. All of the 100 farmers received trainings on greenhouses, beekeeping, cultivation of strawberry plants and comparative feeding  in animal breeding.
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) funded the second phase of the “Agricultural Vocational Education: Development of New Occupations” project in 2018. The project developed up-to-date teaching materials, textbooks and training methodology for agricultural occupations and trades. In addition to 12 modules (3 in horticulture, 5 in crop production, 4 in agricultural machinery) from the first phase, the project`s second phase developed textbooks, teaching materials and training methodology for 7 additional modules in the areas of vegetable and fruit growing. The project scope also included the delivery of nine master-classes by the authors of the text books for the students, teachers and trainers of the vocational schools in Gabala, Ismayilli and Gakh, as well as general capacity-building and the new modular approach methodology trainings for a group agricultural experts and vocational school teachers.
  • In addition, in 2018 BP alone spent $1.1 million on sponsorship projects in Azerbaijan. These are:
  • Research and publication on founders of the first democratic republic in the East, which was BP’s contribution to the 100th anniversary celebrations of the Azerbaijan Democratic Republic. The book is based on unique research and is first ever publication to commemorate all founders of the Azerbaijan Democratic Republic and their historical contribution. BP presented the book “Founders of the Republic” as its gift to the 100th anniversary nationwide celebrations.
  • A documentary which features the last session of the Parliament of the Azerbaijan Democratic Republic. It was at that tragic session that bolshevics came to power putting an end to the democratic rule in Azerbaijan.  The documentary was made in cooperation with the Heydar Aliyev Foundation and Baku Media Center.
  • Thorough cultural and historical research into one of the amazing national art trends of Azerbaijan – Kelaghayi Art, and publication of an exquisitely designed book to present the results of the research. The project aimed to support the preservation of one of the world’s most ancient cultures and enhance international recognition of Azerbaijan’s rich cultural heritage.
  • The Azerbaijani language edition of three international books on economics. The project provided direct access to the world’s three most widely used books on international economics theory and policy, macro-and microeconomics, and is BP’s contribution to transferring international knowledge and expertise to Azerbaijan. It is expected that the project will help improve the quality of teaching and modernisation of education at Azerbaijan’s universities of economics.
  • In 2018, BP also  launched a  project  to support the modernization of monitoring and evaluation e-infrastructure of the Centre for Analysis of Economic Reforms and Communication (CAERC) through development of a sophisticated software. The new software will help evaluate the measures undertaken by the government within the framework of the Strategic Road Maps for social and economic development of Azerbaijan.
  • BP’s business lectures at Baku Higher Oil School (BHOS) by BP experts and senior executives are designed to support national petroleum engineers’ development in Azerbaijan.  As part of this initiative, BP senior managers and members of the leadership team regularly give lectures and presentations at BHOS and ASOIU, sharing their knowledge and experience and providing information about BP’s activities, technology, operations processes and mechanisms.
  • BP also funds an innovative educational project at BHOS - the “Business Education for Engineers”, to help national engineers smoothly step from university to business career. The programme is designed for the 5th year undergraduate students and aims to provide extensive knowledge in management and business.
  • BP’s ongoing support for the development of sport through its partnership with Azerbaijan’s National Olympic and Paralympic Committees. As part of this partnership BP funds a series of development programmes and supports a group of national athletes. In 2016 BP extended its partnership agreement to support Azerbaijan’s national teams, both National Committees and a group of seven national athletes until the end of 2020.

Download the presentation slides about our business performance

 

Further information: Tamam Bayatly at BP’s Press Office in Baku.
Telephone: (+994 12) 525 58 95