2022 first half 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%), ONGCVidesh (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 2022, we spent about $229 million in operating expenditure and $791 million in capital expenditure on ACG activities.

During the first half of the year, the Azeri Central East (ACE) project progressed according to the plan along with the other bp-operated activities. 

The ACE topsides and drilling facilities fabrication activities continued at the fabrication yard in Bibi-Heybat. The drilling facilities lifting onto the topsides unit was safely and efficiently completed. The 2,350 tonnes modular drilling support module (MDSM) and 2,400 tonnes drilling equipment set (DES) were first transported by self-propelled modular trailers to the jacking position, then were jacked up by incrementally installing steel cassettes to reach the final height of around 27 metres and then they were skidded onto the topsides deck. This was a carefully planned complex “Jack and Skid” operation and a first for bp in the Caspian. Integration of the drilling facilities on the topsides deck is currently ongoing. 

Another completed ACE activity is the topsides north and south cranes, which were safely installed along with the gas injection compressor exhaust. 

The topsides pipe erection and hydrotesting progressed as planned. The topsides and drilling mechanical completion handovers continued, commissioning works on the main power generation, chemical injection and sewage treatment packages commenced. The living quarters mechanical completion and handover progressed.

At the Heydar Aliyev Baku Deepwater Jackets factory (BDJF), the jacket fabrication is completed with preparation activities for load-out still ongoing. 

The ACE subsea diving campaign continued with the support of the subsea construction vessel Khankendi. ACE gas subsea pipeline tie-ins to the existing infield pipeline were completed during the East Azeri turnaround (TAR) programme in June. 

All ACE related works on the Central Azeri and East Azeri platforms to support the gas pipeline tie-ins were also completed with overall all ACE scope successfully executed during the East Azeri TAR. 

The modification construction works for the ACE operations control from the shore are in progress at the Sangachal terminal.  

At the end of the second quarter of 2022, the ACE project reached the 75% progress milestone. The project construction activities continue at peak and involve about 5,000 people across Baku, Europe and the UK, with the majority of them being Azerbaijani nationals.

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

Production 

During the first half of 2022, ACG continued to safely and reliably deliver stable production. Total ACG production for the first half of 2022 was on average about 424,000 barrels per day (b/d) (about 77 million barrels or 10 million tonnes in total) from the Chirag (25,000 b/d), Central Azeri (108,000 b/d), West Azeri (109,000 b/d), East Azeri (62,000 b/d), Deepwater Gunashli (78,000 b/d) and West Chirag (42,000 b/d) platforms.

At the end of the quarter, 136 oil wells were producing, while 37 were used for water and eight for gas injection.

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

In accordance with the plan, production from the East Azeri platform was suspended for about 15 days to enable maintenance, inspection and project work to be undertaken efficiently. 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 on schedule.

The Chirag Gas Lift Project (CGLP) was also completed safely and within budget in the second quarter of 2022. The project has delivered important plant safety modifications helping manage any overpressure risk by removing reliance on human intervention and operational procedures. Throughout the year, the new Gas Lift distribution system will be introduced to the platform’s candidate wells in line with its production schedule.

Drilling and completion

In the first half of 2022, ACG completed eight oil producer wells. 

Associated gas

During the first half, ACG delivered an average of around 9 million cubic metres per day of ACG associated gas to the state of Azerbaijan (2 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 first half of 2022, 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 more than 114 million barrels of oil and condensate. This included about 107 million barrels through Baku-Tbilisi-Ceyhan (BTC) and around 7 million barrels through the Western Route Export Pipeline (WREP).

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

On average, around 69 million standard cubic metres (about 2,440 million standard cubic feet) of Shah Deniz gas was sent from the terminal daily in the first half of the year.

BTC Co. shareholders are: bp (30.1%), SOCAR (25.00%), MOL (8.90%), Equinor (8.71%), TPAO (6.53%), Eni (5.00%), TotalEnergies (5.00%), ITOCHU (3.40%), INPEX (2.50%), ExxonMobil (2.50%) and ONGCVidesh (2.36%).

In the first half of 2022, BTC spent about $49 million in operating expenditure and about $9 million in capital expenditure.

On 23 March 2022, BTC reached a significant milestone by loading the 5000th tanker of oil transported from the Sangachal terminal near Baku across Azerbaijan, Georgia and Turkey to Ceyhan.

Since the 1,768 km BTC pipeline became operational in June 2006 till the end of the second quarter of 2022, it carried a total of 3.87 billion barrels (more than 516 million tonnes) of crude oil loaded on 5,087 tankers and sent to world markets.

In the first half, around 107 million barrels (more than 14.1 million tonnes) of BTC-exported crude oil was lifted at Ceyhan loaded on 148 tankers.

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

Shah Deniz participating interests are: bp (operator – 29.99%), LUKOIL (19.99%), TPAO (19.00%), SOCAR (14.35%), NICO (10.00%) and SGC (6.67%).

In the first half of 2022, Shah Deniz spent around $1,260 million in operating expenditure and around $186 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.

Production

During the quarter, the Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan (to Azerkontrakt), Georgia (to GOGC), Turkey (to BOTAS), to the BTC Company in multiple locations and to buyers in Europe.  

In the first half of the year, the field produced about 13 billion standard cubic metres (bscm) of gas and more than 2 million tonnes (more than 18 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 first half of 2022, the Shah Deniz 2 project progressed safely towards the production start-up from the West South flank in the third quarter. 

The subsea construction vessel Khankendi safely completed most of the subsea installation activities on the West South flank including the installation of subsea pipelines, production trees, manifolds and control umbilicals. The diving activities for pipeline tie-ins were also completed. 

The West South flank start-up project also progressed with the topsides construction activities on the Shah Deniz Bravo platform. These activities are currently nearing completion. The pre-commissioning and testing activities for both topsides and subsea parts of the project are progressing on schedule. The best practices and experience from the start-up of the first deep water flank - East South - are being widely applied throughout the West South flank construction activities.

Drilling

In the first half of 2022, the Shah Deniz Alpha platform rig conducted a set of well-work activities and then went back on warm stack.

The Istiglal and Maersk Explorer rigs have already drilled 21 wells in total and completed 19 out of those for the 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 the final depth and suspended.

SCPC shareholders are: bp (29.99%), LUKOIL (19.99%), TPAO (19.00%), SOCAR (14.35%), NICO (10.00%) and SGC (6.67%).

In the first half of 2022, the SCP spent around $29 million in operating expenditure and around $2 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 2022, the daily average export throughput of the SCP was 56.9 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 with a total depth of 7,189 meters at the base of the Fasila unit. The well encountered gas condensate resource in some of the penetrated reservoirs. The post-well analysis of the data received during the drilling is currently ongoing and includes reprocessing of the original seismic data. This will be followed by interpretation of the results. This work is required to evaluate the hydrocarbon discovery and plan the next stage of exploration activities. 

In the Shallow Water Absheron Peninsula (SWAP) structure, the third exploration well -QBDX01 - was safely plugged and permanently abandoned on 25 May 2022. The well, which was drilled in the Qarabatdag location within the South-East Prospective Area of the SWAP contract area, did not encounter any economic hydrocarbons. The previous two wells drilled in the North Khali (abandoned in December 2021) and Bibiheybat (abandoned in mid-March 2022) areas within the SWAP contract area had similar results. The QBDX01 exploration well represented the final phase of the planned activity within the SWAP exploration drilling programme. Upon completion of the drilling programme, the Satti jack-up rig was released from the SWAP project.

At the end of the second quarter of 2022, the number of bp’s Azerbaijani national employees was 2,268 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 its 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 2022, bp and its co-venturers in the bp-operated joint ventures spent more than $1.3 million in Azerbaijan on social investment projects.

bp (on behalf of its 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 its co-venturers in the joint ventures that it operates). This a multi-million-dollar initiative in support of local business development. The programme is part of the efforts to increase the local content of contracts in Azerbaijan and contribute to the healthy and transparent development of the local economy. During the first half of 2022, the programme continued its activities by providing capacity development support to local organizations. This included vocational education capability development of the training centres and capacity development of three local organizations. In addition, 20 individual entrepreneurs (The Patriotic War veterans) completed their training within the vocational skills development programme implemented in cooperation with the ‘Kulane’ vocational education and training centre.
• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) has been supporting for five 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 334 young people out of 389 participants in the programme over the past five years (86%) 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 2021-2022 academic year. Currently, the programme continues with 93 participants selected for the new phase of the project. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a project aimed at transferring the international business education expertise to Azerbaijan through bringing the internationally recognized Adaptive Strategic Execution Programme to the country. The programme is based 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, four streams with a total of 78 graduates have already been completed. The project now continues with 42 participants in two new streams.

• bp (on behalf of its 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 is achieved through establishing a competitive and sustainable Master of Science in Computer Science and Master of Science in Data Analytics (MSCS/DA) dual degree programme, as well as further developing the Centre for Data Analytics Research at ADA University. The programme successfully continues with around 40 students in total attending the first and second cohort of studies. 20 students from the first cohort have completed their two-year master studies and 19 students from the second cohort have left for the US to attend their summer semester at the George Washington University. The selection of students for the third cohort is currently ongoing. 

• bp (on behalf of its co-venturers in the joint ventures that it operates) successfully completed a social investment initiative focusing on remote learning in career planning, financial literacy and entrepreneurship for the benefit of schoolchildren aged between 13 and 17. Some 10 video lessons on entrepreneurship, nine video lessons on financial literacy and two video lessons on career planning were developed and made accessible to public via online and public TV channels as part of the project. The project also supported the teaching of entrepreneurship and financial literacy as extracurricular classes in 30 schools in Baku, Absheron, Sumgait, Ganja, Mingachevir, Masally, Gakh, Zagatala and Gabala. A total of 64 schoolteachers received training on entrepreneurship and financial literacy, and relevant teaching and learning materials were developed for the benefit of over 3,000 students. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) successfully completed the ABB Tech Academy initiative. The project trained and developed a total of 208 people from all sectors of the economy enhancing their IT skills, overall technological knowledge and capabilities and enabling them to keep up with the fast-changing technology world. Of the 208 participants, the training of 150 was funded jointly by bp and its co-venturers and ABB. Over the duration of the project, a total of nine streams were offered to the participants who represented more than 50 local and international organizations.

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a social investment 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 completed the language training in 2021. The programme currently continues with mentoring sessions. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) is implementing a social project to support youth entrepreneurship in rural areas. This is achieved through application of a youth business incubation model for 30 young people selected from the Samukh, Goranboy and Shamkir districts. The project includes provision of training and equipment for the project beneficiaries to help them start their own businesses. Work is currently ongoing to supply the project participants with required equipment and devices. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a project aiming to empower local autism specialists by providing them with access to 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 supports a group of autistic persons with preparation of individual self-development and business plans to help enhance their employment opportunities. During 2022, the project progressed with preparation of a book about autism programmes, organization of an awareness raising photo session, an autism cycling tour and an autism fashion night event. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) successfully completed a project, which enabled five rural schools located in remote communities to access affordable and environmentally friendly heating systems. As part of the project, the schools comprised of 106 classes were renovated and provided with a pellet-based heating system. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) has started a new project to enhance financial acumen of selected workforce in Baku and Ganja. To date, a total of 70 people - 32 from Baku and 38 from Ganja - have received training in finance, accounting and taxation followed by an internship opportunity to gain practical experience. The project scope also includes organization of a career fair with the engagement of employers from public and private enterprises.

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a two-year environmental project aiming to offset carbon emissions through preventing soil erosion and desertification. As part of the project, 250,000 new trees will be planted, and maintenance support will be provided to look after 110,000 already planted trees in the Shamkir and Samukh districts. In addition, an innovative tree planting system with water-preserving equipment and layer planting technique will be created on one hectare of selected territory in the Gobustan district. To date, the project has completed the planting of 50,000 trees in Samukh and 600 trees in Gobustan. Land preparation for the planting of 200,000 trees in Shamkir and 400 trees in Gobustan continued. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting war affected families in the Tovuz and Agstafa districts by providing them with social and psychological rehabilitation and legal services, as well as creating an opportunity to participate in two networking camps. To date, a total of 305 direct beneficiaries and 700 family members have received psychological and legal support as part of this project.

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) has completed a project in support of inclusive education in four schools - two in Baku and two in Sumgayit. As part of the project, resource rooms with all necessary equipment and technology were established at each school and the teaching staff were trained to efficiently use the new facilities. The project also helped achieve behavioral change by raising the school community’s awareness about inclusive education. The project was implemented in cooperation with the Ministry of Education of Azerbaijan. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) has launched a new project aiming to support the development of an inclusive education model in physical education and its application by the Azerbaijan State Academy of Physical Education and Sport for the benefit of students with special needs. 

• bp (on behalf of its co-venturers in the joint ventures that bp operates in Azerbaijan) has launched a new project aiming to support the development of a textbook and a learning course about renewable energy for the students and the teaching staff of Baku Higher Oil School.  

In addition, in the first half of 2022, bp alone spent more than $0.8 million on various social and sponsorship projects in Azerbaijan. Some examples of these include:

• translation from English into Azerbaijani and publication of 14 academic textbooks on startup and innovation, corporate finance, marketing, social research, international relations, economic policy, managerial economics, statistics for business and economics, econometrics, psychology and information security.  This project aims to enhance the quality of teaching in 16 disciplines at over 15 local universities. 

• development of a manual to help school psychologists do their job more effectively. The project is implemented in collaboration with the Ministry of Education. It aims to equip school psychologists with the necessary theory and practice of dealing with the most common and challenging psychological problems at schools including stress, mental and moral trauma cases, as well as post pandemic mental health issues and syndromes.

• strengthening nanoelectromechanical system oriented scientific research capacity of the Azerbaijan State University of Economics through supporting the university`s research undertakings and cooperation with international universities.

• support for the development of the country’s startup sector. The project was implemented in cooperation with the Ministry of Digital Development and Transport of Azerbaijan and with the Hungarian government agency responsible for export promotion (HEPA). The project trained up to 29 local startups to enter the European market providing them with the frameworks to scale up to European countries with the focus on Hungary, Germany and the UK.

• contribution to the research into and promotion of Nizami’s invaluable and enormous legacy by sponsoring two books dedicated to this great Azerbaijani poet and thinker – ‘Nizami Ganjavi – The Forgotten Publications’ and ‘The Magic of the Pen’. Both publications are bp’s gift to the ‘Year of Nizami Ganjavi’ announced by President Ilham Aliyev on the occasion of the great poet’s 880th birthday anniversary.

• support for translation from Russian into Azerbaijani and English and publication of a collection of research material about the art of patchwork.
  

• a digital library for Baku State University to benefit 15,000 students and members of the teaching staff. 

• support for enhancement of project management capabilities at eight universities through training the administrative staff, students and teachers, development of a curriculum and teaching materials.

• support for promotion of inclusiveness in treatment and rehabilitation of people with disabilities in Azerbaijan by training 50 local rehabilitation specialists from different medical centers. 

• sponsorship of the third International Autism ABA Azerbaijan Conference. This year the conference brought together international experts who discussed the modern methods of developing a variety of skills in people with autism spectrum disorder.

• support for the development of Azerbaijan’s national sport by extending bp’s decade-long partnership with Azerbaijan’s National Olympic and Paralympic Committees until the end of 2024. 

• sponsorship of the Azerbaijan Business Case Competition 2022 that aims to develop future business leaders for the country by raising young people’s awareness about the existing business potential. 

• involvement in the first ‘TEKNOFEST Azerbaijan’ Aerospace and Technology Festival held in Baku on 26-29 May. During the festival, a group of bp employees delivered presentations on various technology topics.

• sponsorship of and participation in the 27th Caspian Oil and Gas exhibition, now known as Baku Energy Week. bp’s leadership hosted a group of senior government officials at bp’s stand and participated in Baku Energy Forum discussing opportunities for Azerbaijan’s energy transition. 

• support for the 'Critical Energy Infrastructure Protection and Sustainability' programme arranged by the Institute for Development and Diplomacy (ADA University) in collaboration with the Cyber Security and Infrastructure Security Agency, Naval Postgraduate School’s Energy Academic Group and SOCAR. The initiative aimed to enhance the country’s energy security efforts and identify improvement opportunities. A group of experts from bp’s Baku office participated in the programme.