2020 third quarter results

 

ACG participating interests are: BP (30.37%), SOCAR (25.0%), MOL (replaced Chevron as of 16 April 2020 (9.57%), INPEX (9.31%), Equinor (7.27%), ExxonMobil (6.79%), TPAO (5.73%), ITOCHU (3.65%), ONGC Videsh Limited (OVL) (2.31%).

 

 

BP Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.
 
In the first three quarters of 2020, we spent about $399 million in operating expenditure and about $1,398 million in capital expenditure on ACG activities.
 
During the third quarter, fabrication activities on the topsides and drilling facilities for the Azeri Central East (ACE) platform continued at the fabrication yard in Bibi-Heybat. The latest activities include the commencement of the major lift programme despite the disruption caused by COVID-19, the arrival of the drilling derrick at the yard, with all three sections of the derrick already safely offloaded from the barge and positioned at the site’s construction location. Construction of the drilling modules is currently ongoing.
 
At the Heydar Aliyev Baku Deepwater Jackets factory (BDJF) the pin piles have been completed, successfully loaded out and driven into the seabed ready to receive the platform jacket. The jacket fabrication continues, as does the work on the subsea structures.
 
Engineering and procurement works remain on track to support the first production from the ACE project in 2023, with the larger equipment now moving from the suppliers into Azerbaijan.
 
Production
 
During the third quarter, ACG continued to safely and reliably deliver stable production. Total ACG production for the three quarters was on average about 482,000 barrels per day (b/d) (about 132 million barrels or 17.9 million tonnes in total) from the Chirag (36,000 b/d), Central Azeri (115,000 b/d), West Azeri (118,000 b/d), East Azeri (64,000 b/d), Deepwater Gunashli (97,000 b/d) and West Chirag (52,000 b/d) platforms.
 
At the end of the quarter, 124 oil wells were producing, while 39 wells were used for water and seven for gas injection.
 
Drilling and completion
 
During the first three quarters of 2020, ACG completed 10 oil producer and 2 injector wells.
 
Associated gas
 
During the three quarters, ACG delivered an average of 6 million cubic metres per day of ACG associated gas to SOCAR (1.6 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.

In the third quarter of 2020, 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 condensate, and about 85 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 105 million standard cubic metres per day.
 
During the first three quarters of 2020, the Sangachal terminal exported about 183 million barrels of oil and condensate. This included about 160 million barrels through Baku-Tbilisi-Ceyhan (BTC) and about 23 million barrels through the Western Route Export Pipeline (WREP).
 
Gas is exported via the South Caucasus Pipeline (SCP), the South Caucasus Pipeline expansion system and via SOCAR gas pipelines connecting the terminal’s gas processing facilities with Azerigas’s national grid system.
 
On average, about 48 million standard cubic metres (more than 1,691 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the three quarters of 2020.

The BTC Co. shareholders are: BP (30.1%); AzBTC (25.00%); MOL (replaced Chevron as of 16 April 2020 (8.90%); Equinor (8.71%); TPAO (6.53%);

 

In the first three quarters of 2020, BTC spent more than $67 million in operating expenditure and about $20 million in capital expenditure.
 
Since the 1,768 km BTC pipeline became operational in June 2006 till the end of the third quarter of 2020, it carried a total of 3.52 billion barrels (about 469 million tonnes) of crude oil loaded on 4,595 tankers and sent to world markets.
 
In the first three quarters of 2020, BTC exported about 162 million barrels (about 21.4 million tonnes) of crude oil loaded on 214 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.

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

 

 

In the first three quarters of 2020, Shah Deniz spent about $620 million in operating expenditure and $719 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.
 
Production
 
During the third quarter, the Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC and SOCAR), Turkey (to BOTAS) and to BTC Company in multiple locations.
 
In the first nine months of 2020, the field produced around 13.3 billion standard cubic metres (bcm) of gas and 2.7 million tonnes (21.6 million barrels) of condensate in total from the Shah Deniz Alpha and Shah Deniz Bravo platforms.
 
The existing Shah Deniz facilities’ production capacity is currently over 56 million standard cubic metres of gas per day or more than 20 bcma.

In the third quarter of 2020, the installation of subsea production infrastructure using the subsea construction vessel Khankendi continued as per plan. The Israfil Huseynov barge safely completed the mechanical installation of flowlines to East South flank on 8 October, marking a major milestone in the project scope.
 
The start-up of deep-water East South flank (at 540m water depth) is planned for the first half of 2021, following completion of offshore construction and commissioning. The start-up of the two remaining deep-water flanks (West South and East North) is planned for future years and will support plateau rates of gas production.

The SCP Co. shareholders are: BP (28.8%), TPAO (19.0%), AzSCP (10.0%), SGC Midstream (6.7%), PETRONAS (15.5%)

(10.0%) and NICO (10.0%).

 

In the first three quarters of 2020, SCPC spent more than $35 million in operating expenditure and more than $8 million in capital expenditure in total.
 
The SCP has been operational since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey. The expanded section of the pipeline commenced commercial deliveries to Turkey in June 2018.
 
During the three quarters, the daily average throughput of SCP was 32.6 million cubic metres of gas per day.

On the Shafag-Asiman offshore block, the first exploration well was spudded on 13 January 2020 and drilling operations are currently ongoing. The well has reached a depth of 3864 metres. Once the well reaches the target depth, the well data will be analysed and, if successful, an evaluation programme may be conducted to confirm the results.
 
On the D230 block, the 3D seismic acquisition programme, which commenced in December 2019, was successfully completed on 14 March 2020. The processing of the full seismic data was completed in October and the prospect is currently being evaluated. If the results from the interpretation of the seismic survey are positive, bp may start the main exploration programme.
 
In the Shallow Water Absheron Peninsula (SWAP) area, planning is ongoing for drilling exploration wells in three selected prospective areas. We will commence drilling activities once the upgrade of the rig selected to drill the first well is completed. On 28 August, the Environmental and Social Impact Assessment (ESIA) for the well was  disclosed and we are in the process of discussions with the government and public discussions to obtain necessary permissions to start drilling the first well in the first quarter of 2021.

 At the end of the third quarter of 2020, the number of BP’s Azerbaijani national employees was 2,497 including fixed-term employees.
 
Since mid-2018, 90% of BP Azerbaijan’s professional staff has been nationals.
Non-professional staff of BP in Azerbaijan is 100% 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.

 

• 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 the first three quarters of 2020, BP and the co-venturers in BP-operated joint ventures spent $2.6 million in Azerbaijan 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 for two years and successfully completed in August 2020  a programme aimed at enhancing employment opportunities for people with disabilities in Azerbaijan. The programme called “Enhancing employability skills for people with disabilities” aimed to develop skills and capabilities of selected people with disabilities through trainings and other specialised activities. The project also provided psychological counselling sessions to enhance the participants’ self-confidence. The first phase of the project ended in January 2019 and it moved to Phase 2 in July. In Phase 2  the training programme was expanded in order to further enhance employment opportunities for the participants. As part of the project  bp Azerbaijan developed a special work placement programme and provided an opportunity for selected nine participants from Phase 1 and four participants from Phase 2  to engage in an international working environment practicing their new skills and learning from experienced bp staff.  In addition, an online job fair was arranged  in July 2020 to help 95 participants in  Phase 2 find jobs.
   
  ·         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 the first three quarters of 2020 forty  new local companies enrolled for the programme  and five companies graduated from it.  
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported secondary schools in enhancing IT skills teaching. As part of the 3-year initiative, a new curriculum for IT specialised secondary schools was  developed in cooperation with the Ministry of Education. In addition, 50 teachers representing 25 Baku schools  were trained to pilot and effectively use the new curriculum. On the basis of the new curriculum, new teaching and learning materials including textbooks for the 10th and 11th grades were published  and donated  to the selected schools. The project was  successfully completed in August 2020.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) has been  supporting for four years  a large group of 11th grade students in their efforts to prepare for higher education The participants in the project  called “Build your Future”, are selected from disadvantaged families. The project activities include two components – academic knowledge and social integration.
   
  ·         In total,  some 282 young people out of 315 participants in the past four academic years (90%) have been successful, meeting the requirements of the higher school entrance exams and becoming students. Based on the results and overall success of this initiative, bp and its co-venturers have decided to continue the project into the next year.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is 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. This project called “Sweet Gold” was then expanded to cover two more districts - Agstafa and Tovuz, along the bp-operated pipelines. This new phase is for three years - 2018-2020 aiming to benefit over 500 community members and to achieve the planting of over 110000 nectar trees for bee-breeding. To date over 60000 nectar trees have already been planted and over 400 new project beneficiaries have been selected and trained.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported Baku Engineering University by purchasing materials for chemical experiments and installing new equipment in the 11 laboratories earlier established at that university by bp. In addition, the project scope included the translation from English into Azerbaijani of learning materials for the Chemical Engineering Department.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting “English for Engineers Project” which intends to enhance English language knowledge of teachers and students of the Azerbaijan State Oil and Industry University. The project helps educational capacity-building, as well as improves the university’s international co-operation. To date, 18 English language teachers have successfully completed “Train-the-Trainers” courses. Classes for 200 students selected for the programme also continued online in the third quarter of the year.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting the transfer of international business education expertise to the country through bringing the internationally-recognised Adaptive Strategic Execution Programme to Azerbaijan, basing it at Baku’s ADA University. Overall six streams are planned within the duration of the project covering a total of up to 108 students and of these two streams with a total of 44 participants have been completed. The training programme of the project is certified by the Fuqua School of Business at Duke University (USA) and is based on a world-class business education curriculum developed by Duke Corporate Education (Duke CE), a leader in providing executive education globally. The project is designed to help meet the current market demand in executive education.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan)  is implementing a project to support development of micro-entrepreneurial skills and capabilities of rural women and enhance their self-employment opportunities by setting up a Community Family Support Club in the Tovuz district.  The Club, whose staff have already been recruited and trained, will provide daily care services to the children of vulnerable women. To date, 22 women have received trainings improving their skills  to manage their own small businesses and have been  provided with necessary equipment to enable  them to launch their micro level income generation activities.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a three-year educational project to strengthen data analytics research and training capacity in Azerbaijan. This will be achieved through establishing a competitive and sustainable dual Master of Science in Computer Science and Master of Science in Data Analytics (MSCS/DA) degree programme, as well as further developing the Centre for Data Analytics Research at ADA University. The degree programme will be comprised of five semesters of which three semesters will take place in Baku and two semesters in Washington DC.   Twenty students have been selected for the first cohort  and they will  start tutorials online.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting  a social project which aims to strengthen project management capabilities of over 10 local universities. Participants in the project are being  trained to become internationally certified project management specialists (Certified International Project Management Associates, Level D) and to form project management teams in their respective universities. A textbook on project management has been prepared in the Azerbaijani language to be used as a manual during the trainings.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a pre-school educational project whichhas brought  together a group of local experts to develop a learning material for parents, childcare specialists and pre-school teachers. The learning material, comprised of 12 sections, will provide recommendations and guidance on effective care of children from birth to school age.  
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) has launched a new social project to support inclusive education in the Tovuz and Agstafa districts. As part of the project, school and preschool teachers will be provided with learning materials and  trainings on 10 inclusive education related themes.  
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) has launched a new social project to support professionals who treat children with disabilities and developmental  delays. A practical training centre will be established in one of the local universities in partnership with the US-based Georgetown University to provide  trainings for local professionals aiming to enhance the in-country network of child development services.
   
  ·         bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a project aiming to empower school students to make thoughtful decisions in their career choice. About 500 school students will be provided with trainings and mentorship opportunities to help them identify their individual interests, their gaps, as well as obtain  knowledge and skills needed to achieve their career goals. The project also aims  to enhance public awareness about the  importance of vocational education.
   
  In addition, in the first three quarters of the year, bp alone spent $1.1 million  on sponsorship projects in Azerbaijan. These included:
   
  ·         Translation from English into Azerbaijani and publication of 10 academic textbooks on sustainability and supply chain management; human resources management; media and mass communications; banking and financial markets, principles of marketing; fundamentals of management; political science; social sciences; case management; ethics and values in social work.  It is expected that this project will help raise the quality of teaching of these disciplines in higher educational institutions benefiting more than 17,000 students at 10 universities. To date, six books have been translated and  donated to local universities and libraries.
   
  ·         bp continues to  support  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.
   
  ·         bp is supporting a youth project called “Yuksel” to help students and young people realize their professional dreams and develop individual qualities. The main idea of the project is to inspire young people to success and achievements. As part of the project, renowned people and well known specialists, who can serve as role models for young people,  lead workshops at Baku Book Centre every week and  present their audience with books purchased by bp on the subjects they cover at the workshops.
   
  ·         bp is funding the “Management and business skills for young engineers” programme for Baku Higher Oil School. This is a comprehensive training programme that will equip young engineers with analytical tools and techniques to improve internal and external operations. The students will develop skills in the analysis and evaluation of complex business problems and gain a methodical approach to problem solving and decision making. The curriculum consists of eight core modules.      
   
  ·         bp is also supporting the Enactus Azerbaijan project  which promotes entrepreneurship by developing students’ business skills. Enactus teams from 23 local universities, a total of 150 people, participated in the Winter School.  The universities winning annual competitions in different countries represent their countries and universities in the Enactus Global competition held in various countries around the world.
   
  ·         bp recently sponsored  the 14th Annual Baku Summer Energy School of Caspian Centre for Energy and Environment of ADA University whuch was held online. The event  brought together 40 participants from Azerbaijan and other countries in Europe, Middle East, North and South America to examine and gain a better understanding of global and Caspian energy and environment issues. The topics discussed included regional pipeline and energy security developments,  fundamentals of energy, energy law and economics, environmental issues, management in oil and gas industry.
   
  ·         bp Azerbaijan sponsored a research book on the importance of the Southern Gas Corridor (SGC)  which was publicly presented together with SOCAR and ADA University.  The pipeline is the first ever direct link to connect the gas fields in the Caspian with the markets in Europe. The book consists of eleven chapters contributed by ten well-known national and international authors with deep knowledge and understanding of the various countries, markets and energy developments related to SGC. Each chapter focuses on a different aspect of the global gas and LNG markets, in respect to the SGC and the wider South-Eastern  Europe region. 
   
  ·         bp has continued its bursary progamme relaunched in late 2019. The programme aims to improve English language skills of the 2nd year students representing petrochemical universities. This will enable the students to pursue their career ambitions more confidently with improved English language skills.