BP Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.
On 14 September 2017 the Azerbaijan Government and SOCAR, together with the international co-venturers signed the amended and restated ACG PSA. The contract was ratified by the Parliament (Milli Majlis) of the Republic of Azerbaijan on 31 October.
In the first three quarters of 2017, we spent more than $339 million in operating expenditure and about $890 million in capital expenditure on ACG activities.
IIn the third quarter of the year, ACG continued to safely and reliably deliver stable production. Total ACG production for the three quarters was on average 585,000 barrels per day (b/d) (about 160 million barrels or 22 million tonnes in total) from the Chirag (52,000 b/d), Central Azeri (133,000 b/d), West Azeri (120,000 b/d), East Azeri (80,000 b/d), Deepwater Gunashli (119,000 b/d) and West Chirag (81,000 b/d) platforms.
At the end of the third quarter, 114 oil wells were producing, while 45 wells were used for gas and water injection.
Drilling and completion
ACG completed 12 oil producers and 2 water injector wells during the first three quarters of 2017.
In the first three quarters of 2017, ACG delivered an average of about 8.6 million cubic metres per day of ACG associated gas to SOCAR (2.4 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 2017, 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 29.5 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is about 49.3 million standard cubic metres per day.
During the first three quarters of the year, the Sangachal terminal exported around 211 million barrels of oil, including third party volumes. Of this, more than 189 million barrels were exported through Baku-Tbilisi-Ceyhan (BTC), 20 million barrels through the Western Route Export Pipeline (WREP), and about 1.8 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 27 million standard cubic metres (more than 949 million standard cubic feet) of Shah Deniz gas was exported from the Terminal daily during the first three quarters of 2017.
In the first three quarters of 2017, BTC spent approximately $101 million in operating expenditure and about $19 million in capital expenditure.
Since the 1,768km BTC pipeline became operational in June 2006 till the end of September 2017 it carried a total of about 2.8 billion barrels (more than 374 million tonnes) of crude oil loaded on 3,674 tankers and sent to world markets.
During the first three quarters of 2017, BTC exported around 193 million barrels (about 26 million tonnes) of crude oil loaded on 249 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 and Kazakhstan.
In the first nine months of 2017, Shah Deniz spent approximately $368 million in operating expenditure and about $2.28 billion in capital expenditure, the majority of which was associated with the Shah Deniz Stage 2 project.
In the third quarter of 2017, the Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC), Turkey (to BOTAS) and to BTC Company in multiple locations.
During the first three quarters, the field produced about 7.4 billion standard cubic metres (bcm) of gas and 1.7 million tonnes (about 14 million barrels) of condensate.
The existing Shah Deniz facilities’ production capacity is currently 30.0 million standard cubic metres of gas per day or around 10.9bcma.
In the third quarter of 2017, Shah Deniz existing (Alpha) platform completed the SDA10 well and brought it on production. The drilling operations on the SDA11 well were resumed and are currently ongoing.
By mid-September 2017, the Istiglal delivered the first completion in the West Flank on the SDD01 well. This was followed by completion operations on the SDD02 well which are currently ongoing. The Maersk Explorer rig is currently drilling the lower section of SDF02.
The above two rigs have already completed four wells on the North Flank and one well on the West Flank, and drilled nine wells in preparation for commencement of Shah Deniz Stage 2 production and subsequent ramp up. Drilling operations will continue to deliver all wells required to ramp up to plateau level.
During the third quarter of 2017, implementation of the Shah Deniz Stage 2 project continued successfully. The project is now over 97 percent complete for first gas, in terms of engineering, procurement, construction and commissioning and remains on target for first gas from Shah Deniz Stage 2 in 2018.
Project activities continue at offshore and onshore sites including the Sangachal Terminal and along the pipeline route.
On 6 September, a new flagship vessel for the Caspian - Khankendi was launched. The state-of-the-art subsea construction vessel has been specifically designed and built to install the biggest subsea production system in the Caspian Sea as part of the Shah Deniz Stage 2 project. The official inauguration of the new $378 million vessel took place in Baku in an event which was attended by H.E. President Ilham Aliyev of the Republic of Azerbaijan. The Khankendi is now deployed to the Shah Deniz field where it is expected to perform subsea installation and construction work over the next eleven years.
On 15 September, the second topsides unit built for the Shah Deniz Stage 2 project - the topsides of the Production and Risers (PR) platform sailed away for offshore installation. This followed the safe and successful sail away and offshore installation of the Quarters and Utilities (QU) platform topsides in early June.
The PR platform topsides unit, which was completed ahead of schedule, sailed away to the Shah Deniz contract area in the Caspian Sea from the Azfen fabrication yard in Bibi-Heybat. The transportation, float-over and installation activities were carefully planned and took six days to complete. The unit now has been installed on top of the PR jacket which was already at its offshore location in a water depth of 94 metres waiting for the deck.
The expansion of the Sangachal terminal – already one of the world's largest oil and gas terminals – is progressing well with the plans to be able to process the additional gas volumes from Shah Deniz Stage 2.
At the peak of project activities, over 24,000 people were involved in construction works across all main contracts in Azerbaijan and over 80% of them were Azerbaijani nationals.
In the first three quarters of 2017, SCP spent more than $21 million in operating expenditure and $636 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 about 20.1 million cubic metres of gas per day during the first three quarters of 2017.
The SCP has a dual operatorship with BP as the technical operator being responsible for construction and operation of the SCP facilities and SOCAR, as commercial operator, responsible for SCP's commercial operation.
During the third quarter of 2017, SCPX activities continued successfully along the pipeline route across Azerbaijan and Georgia. Overall, 98 percent of the construction and commissioning scope for first gas is already completed.
In Azerbaijan, mainline construction is nearing completion with approximately 419km of pipe welded and 380km of backfill complete. All planned horizontal directional drilling activities – five in total, have also been completed. In addition, six hydrotest sections are also complete.
In Georgia, mainline construction is complete. Mainline commissioning is approximately 90 percent done and is on track for completion in 2017. Main construction and commissioning works have continued at both of the compressor stations and the metering station.
Compressor Station 1 construction is 100 percent complete with commissioning works approximately 67 percent done. The facility is on track for start-up in 2018. In Compressor Station 2, construction works are approximately 82 percent complete. In the metering station (Area 81,) construction works are 100 percent complete, commissioning works are approximately 87 percent done and the facility is on track to achieve the readiness for introduction of hydrocarbons milestone in 2017.
At the end of 2017 the processing and interpretation of the 3D data acquired from the Shallow Water Absheron Peninsula (SWAP) contract area was finalized. A Notice of Prospectivity was signed with SOCAR, 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, plans are being developed for a seismic acquisition programme. Subject to PSA ratification by the Parliament of Azerbaijan, the survey will be conducted in the contract area during 2019.
We are also continuing to plan the first exploration well on the Shafag-Asiman block.
Recently, BP was assigned 61% participating interest in the existing onshore Gobustan PSA in Azerbaijan. As part of the assignment, BP, as operator, will drill one exploration well to assess the potential of the deeper reservoirs in the block. It is expected that the exploration well will be drilled in the second half of 2019.
At the end of the third quarter of 2017, the number of BP’s Azerbaijani national employees was 2,739 including fixed-term employees. 85 percent of BP’s professional employees in Azerbaijan are nationals and many of them are in senior positions, including six members of the regional leadership team.
BP remains committed to achieving a nationalization target of 90 percent for professional staff by the end of 2018. This envisages nationalizing some professional roles that are currently occupied by expatriate employees. Non-professional staff of BP in Azerbaijan is already 100 percent nationalized. The nationalization agenda also includes further optimization of BP’s learning and development programmes, close participation in public and private sector initiatives to further improve 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 continues 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 2017, BP and the co-venturers in BP-operated joint ventures spent about $5.7 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:
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Further information: Tamam Bayatly at BP’s Press Office in Baku.
Telephone: (+994 12) 599 45 57