First half 2021 results

ACG participating interests are: bp (30.37%), SOCAR (25.0%), MOL (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 half of 2021, we spent about $266 million in operating expenditure and more than $846 million in capital expenditure on ACG activities.

Despite the challenges and restrictions caused by the pandemic, the Azeri Central East (ACE) project remained resilient during the first half of the year along with the other bp-operated activities. 
The shipment of major equipment packages and bulk materials to Baku continued in support of the fabrication schedule. The subsea structure and spools installation engineering works were completed in the second quarter.

 

Fabrication activities on the topsides and drilling facilities continued at the fabrication yard in Bibi-Heybat. These included progressing the drill floor fabrication on the drilling equipment support module, mechanical package installation, pipe fabrication, erection and cable pulling. The skid deck rail machining commenced. The living quarters modules were delivered to Baku and offloaded at the yard, with the first three modules already lifted.

At the Heydar Aliyev Baku Deepwater Jackets factory (BDJF) the jacket fabrication continued at multiple work fronts. Welding of the centre box frames progressed, preparation for the jacket skidding commenced.  During the second quarter, the project also progressed the offshore installation works associated with the spare power scope on the East Azeri platform, to allow the ACE platform to draw power from the Azeri field optimising power generation across the assets. 

At the Sangachal terminal, the design of the onshore control room was completed allowing to commence the planned modifications in the fourth quarter.    

Overall, the engineering, procurement and fabrication works remain on track to support first production from the ACE project in 2023.

In the first half of 2021, ACG completed a high-density seismic survey aimed to better understand the reservoir and target production and water injection activities to maximize efficient production from the ACG field. The survey activities, which lasted six months and involved three vessels, were delivered safely and on schedule. In addition to the crewed vessels, an unmanned surface vessel (USV) and a mini remotely operated underwater vehicle (ROV) were utilized during the survey. 

 

Production 

During the second quarter, ACG continued to safely and reliably deliver stable production. Total ACG production for the first half of 2021 was on average about 468,000 barrels per day (b/d) (about 85 million barrels or 11 million tonnes in total) from the Chirag (30,000 b/d), Central Azeri (111,000 b/d), West Azeri (118,000 b/d), East Azeri (78,000 b/d), Deepwater Gunashli (88,000 b/d) and West Chirag (43,000 b/d) platforms.

As part of our ACG annual work programme, a planned maintenance programme (turnaround - TAR) was successfully implemented on the West Azeri platform in the second quarter.

In accordance with the plan, production from the West Azeri platform was suspended for about 13 days to enable efficient maintenance, inspection and project work. The programme, which was designed to maintain the long-term ability of the platform to produce in a safe, reliable and environmentally sound way, was completed safely and ahead of schedule.

At the end of the quarter, 131 oil wells were producing, while 44 were used for water and eight for gas injection.

Drilling and completion

In the first half of 2021, ACG completed six oil producer and three injector wells. 

Associated gas

During the first half, ACG delivered an average of 9.1 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.

 

 

 

 

 

 

 

During the first half of 2021, 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 81 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 100 million standard cubic metres per day.

During the first six months, the Sangachal terminal exported about 115 million barrels of oil and condensate. This included about 99 million barrels through Baku-Tbilisi-Ceyhan (BTC) and about 16 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 55 million standard cubic metres (about 1,930 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily in the first half of the year.

In the second quarter of 2021, bp arranged together with the Management Union of Medical Territorial Units (TABIB) of Azerbaijan a voluntary on-site COVID-19 vaccination campaign for the employees and workforce of the Sangachal terminal. By the end of the quarter, about 66% of the terminal personnel including bp employees and workforce, were vaccinated without leaving their workplaces, with no impact on their work schedule or the site’s quarantine rules.

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

In the first half of 2021, BTC spent more than $69 million in operating expenditure and more than $12 million in capital expenditure.

Since the 1,768 km BTC pipeline became operational in June 2006 till the end of the second quarter of 2021, it carried a total of 3.66 billion barrels (more than 488 million tonnes) of crude oil loaded on 4,796 tankers and sent to world markets.

In the first half, around 99 million barrels (more than 13 million tonnes) BTC-exported crude oil was lifted at Ceyhan loaded on 137 tankers.

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

In the first half of 2021, Shah Deniz spent more than $1.14 billion in operating expenditure and around $366 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.

In the second quarter of the year, Shah Deniz celebrated its 25th anniversary since the signing of the Shah Deniz Production Sharing Agreement (PSA). The PSA was signed on 4 June 1996 between SOCAR and a consortium of foreign companies. It was ratified by the Milli Majlis and became effective on 17 October the same year. The Shah Deniz 25th anniversary marks an important milestone in the new history of Azerbaijan’s oil and gas industry. 

Production

During the first six months, 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. Gas deliveries to buyers in Europe that started on 31 December 2020 also continued during the first half of 2021. 

In the first half of the year, the field produced 10 billion standard cubic metres (bcm) of gas and around 1.9 million tonnes (15.1 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 about 70 million standard cubic metres of gas per day or more than 25 bcma. 

In the second quarter of 2021, the Shah Deniz 2 project achieved the start-up of the East South flank at 540m water depth – a major milestone planned for 2021 and delivered safely, on schedule and within the budget. Production from this deep-water flank commenced on 30 June following the successful completion of all related offshore construction and commissioning works. It is expected that the flank will be at full production rates in the third quarter of 2021.

 

Drilling

During the second quarter of 2021, the Shah Deniz Alpha platform rig was on warm stack.

The Istiglal rig delivered three subsea wells completions - SDF03, SDF04 and SDC05. The Maersk Explorer drilled the SDH03 lower section to its final depth and suspended the well. 

The above two rigs have already drilled 21 wells in total and completed 19 out of those for Shah Deniz 2 production and subsequent ramp-up. The completed wells include five wells on the North Flank, four wells on the West Flank, four wells on the East South Flank, four wells on the West South Flank and two wells on the East North flank. One well on the West South flank and one well on the East North flank were drilled to final depth and suspended. 

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

In the first half of 2021, SCP spent around $27 million in operating expenditure and around $11 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 and to Europe in December 2020.

During the first half of 2021, the daily average throughput of SCP was 46.51 million cubic metres of gas per day. 

On the Shafag-Asiman offshore block, the drilling of the first exploration well was completed in March 2021 to the base of the Fasila reservoir to a depth of 7,189 metres. The well encountered gas condensate resource in some of the penetrated reservoirs. However, the resource needed further evaluation and therefore it was decided to suspend the well to allow the evaluation of its results and the planning of the next steps for appraisal. These steps will potentially include reprocessing of the data followed by a sidetrack appraisal well. 

In the Shallow Water Absheron Peninsula (SWAP) area, preparations are ongoing for the drilling of exploration wells in three prospective areas. The Environmental and Socio-economic Impact Assessment (ESIA) for the first SWAP well was disclosed in August 2020 and following public discussions was approved by the government in January 2021. Plans are to spud the first exploration well in the third quarter of 2021.

On D230, the interpretation of the seismic data is currently ongoing. If the results from the interpretation of the seismic survey are positive, bp will consider further exploration activities.

At the end of the second quarter of 2021, the number of bp’s Azerbaijani national employees was 2,344 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 half of 2021, bp and the co-venturers in bp-operated joint ventures spent about $0.5 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:

 

• 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 half of 2021, the programme continued activities in two key areas - financial training for regional entrepreneurs representing 25 companies from Baku, Ganja, Shamkir, Yevlakh and Tovuz and provision of various training sessions to a group of selected EDP participant companies. A total of 15 companies out of 25 were certified as part of the programme during this period.

• 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 by 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 decided to continue the project into the 2020-2021 academic year. The results of this year’s programme, through which a total of 74 project participants received tutorial classes, will be known after the ongoing entrance exams.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported 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 was for three years and one month (2017-2021) aiming to benefit over 500 community members and to achieve the planting of over 110,000 nectar trees for bee-breeding. In total, over 100,000 nectar trees were planted and over 530 project beneficiaries trained as part of this project, which was completed in January 2021. As part of the sustainability monitoring efforts a group of bp and partner companies’ representatives recently visited this honey forest site in the Samukh district.  

• 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 recognized Adaptive Strategic Execution Programme to Azerbaijan, basing it at Baku’s ADA University. 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, a leader in providing executive education globally. The project is designed to help meet the current market demand in executive education. Overall, six streams are planned for the duration of the project covering a total of up to 108 students. Of these, two streams with a total of 44 participants have been completed. The training sessions for the remaining streams will be resumed when face-to-face classes will restart depending on the pandemic conditions in the country.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) successfully completed a project to support development of micro-entrepreneurial skills and capabilities of rural women, as well as to enhance their self-employment opportunities. As part of the project, a Community Family Support Club was established in Tovuz and handed over to the local government authority to serve as a daily care centre for children from vulnerable families. A total of 60 women from low-income families received training to improve their skills to manage their own small businesses and were provided with necessary equipment to enable them to launch 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. A total of 20 students, who were selected for the first cohort, completed the spring semester at ADA University and left for the US to continue their studies at the George Washington University. The admission process for the second cohort is currently ongoing with 13 students selected so far.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) successfully completed a project in support of inclusive education in the Tovuz and Agstafa districts. As part of the project, 300 school and pre-school teachers were provided with learning materials and trainings on 10 inclusive education related themes. Training materials and informational books about inclusive education (including practical recommendations for organization of learning process as part of inclusive education environment) were prepared, and the resource centre on inclusive education for teachers was provided with the relevant literature. 

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a social project to help local professionals who treat children with disabilities and developmental delays. The project builds on the partnership with the US-based Georgetown University to provide training for local professionals aiming to enhance the in-country network of child development services. As part of the project, over 100 local specialists and psychology and social science students were provided with a series of webinars on child health, education and social development.

• 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.  A total of 508 school students from 124 schools attended the `career guidance` tests and were provided with the consultations on test results and soft skills trainings to improve communication skills and analytical thinking.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported an environmental project through which a water delivery and irrigation system was established, as well as more than 10,000 trees were planted on 11 hectares of public land located in the Khojasan settlement near Baku.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) joined the IBA Tech Academy initiative by funding the training of 200 Azerbaijani citizens jointly with the International Bank of Azerbaijan. The project is in support of training the new generation of digital workforce for the country and is part of bp and its co-venturers’ commitment to helping enhance overall capacity-building in Azerbaijan. Currently, a total of 30 people attend the training sessions provided as part of this initiative.  

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) launched a new social project aiming to improve English language skills of English teachers and students of the Azerbaijan State Oil and Industry University. In total, over 3,000 students and teachers at the university will benefit from this programme. A total of 74 teachers were assessed for participation in the trainings which started in June and will continue till September 2021

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) launched a new social project to support youth entrepreneurship in rural areas through application of a youth business incubation model for 30 selected young people from the Samukh, Goranboy and Shamkir districts. The project includes provision of training and equipment support for project beneficiaries to start their own businesses.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a project aiming to empower local autism specialists by enabling them to access international best practices. The project includes support for the development of 60 local specialists using internationally approved training programmes, translation of internationally available learning and teaching materials, as well as public outreach activities. In addition, the project will support a group of autistic persons with preparation of individual self-development and business plans to help enhance their employment opportunities.

In addition, in the first half of the year, bp alone spent more than $0.4 million on various social and sponsorship projects in Azerbaijan. These projects 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, 10 books have been translated and donated to local universities and libraries.

• bp’s support for the establishment of a digital library at the Azerbaijan Pedagogical University to enable students and teachers to access sizeable knowledge and share content with others.

• bp’s ongoing support for the development of sport through the partnership with Azerbaijan’s National Olympic and Paralympic Committees. As part of this partnership, bp funds a series of development programmes. In 2016, bp extended its partnership agreement to support Azerbaijan’s national teams and both National Committees. In May this year, bp sponsored the IBSA Judo Grand Prix Baku 2021 competition. The event brought together about 350 athletes and representatives from 38 countries. bp is currently supporting a group of selected national athletes’ participation in Tokyo. 

• Sponsorship of the IADC Drilling Caspian 2021 Conference & Exhibition. The conference took place in February and brought together industry leaders and drilling professionals to discuss challenges and share best practices, including cutting-edge technology advances as well as new tools and processes that can be used to improve HSE performance.

• bp’s bursary programme re-launched in late 2019. The programme aims to improve English language skills of the second-year students representing petrochemical universities. This will enable the students to pursue their career ambitions more confidently with improved English language skills. 

• bp’s ongoing support for the ‘Ferqli Ferdler’ Congress featuring people with special needs. The congress brings together local and foreign experts to explore ways to achieve better results in this area.

• Sponsorship of the ‘EY Entrepreneur of the Year’ competition as part of bp’s long-term commitment to helping the development of local small and medium-sized businesses. The competition aims to recognize entrepreneurial achievements and growth efforts of local businesses. 

• Sponsorship of the ‘Artificial Intelligence for Digital Governance’ international conference and data competition held in April 2021. The main aim of the conference was to accelerate the application of artificial intelligence-based technologies in Azerbaijan, learn about the experience of other countries and identify new challenges and perspectives in this area.