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 2017, we spent more than $230 million in operating expenditure and about $601 million in capital expenditure on ACG activities.
In the first half, ACG continued to safely and reliably deliver stable production. Total ACG production for the two quarters was on average 585,000 barrels per day (b/d) (about 106 million barrels or over 14 million tonnes in total) from the Chirag (56,000 b/d), Central Azeri (129,000 b/d), West Azeri (116,000 b/d), East Azeri (77,000 b/d), Deepwater Gunashli (120,000 b/d) and West Chirag (87,000 b/d) platforms.
At the end of the first half, 112 oil wells were producing, while 48 wells were used for gas or water injection.
Drilling and completion
ACG completed 11 oil producers and 2 water injector wells during the first half of 2017.
In the first half of 2017, ACG delivered an average of about 10 million cubic metres per day of ACG associated gas to SOCAR (1.8 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 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 two quarters, the Sangachal terminal exported about 141 million barrels of oil, including third party volumes. Of this, about 124 million barrels were exported through Baku-Tbilisi-Ceyhan (BTC), more than 15.5 million barrels through the Western Route Export Pipeline (WREP), and about 1.5 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, 28 million standard cubic metres (more than 987 million standard cubic feet) of Shah Deniz gas was exported from the Terminal daily during the first half of the year.
In the first half of 2017, BTC spent approximately $64 million in operating expenditure and more than $10 million in capital expenditure.
Since the 1,768km BTC pipeline became operational in June 2006 till the end of June 2017 it carried a total of about 2.74 billion barrels (more than 365 million tonnes) of crude oil loaded on 3,584 tankers and sent to world markets.
In the first half of 2017, BTC exported around 125 million barrels (about 17 million tonnes) of crude oil loaded on 159 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 six months of 2017, Shah Deniz spent approximately $249 million in operating expenditure and about $1.64 billion in capital expenditure, the majority of which was associated with the Shah Deniz Stage 2 project.
In the first half 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 two quarters, the field produced about 5.1 billion standard cubic metres (bcm) of gas and 1.2 million tonnes (about 9.7 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 first half of 2017, Shah Deniz existing (Alpha) platform resumed drilling operations on the SDA11 well and these are currently ongoing.
The Istiglal drilling rig delivered the fourth well completion (SDC01 well) on the North Flank in the second quarter. The rig then moved to the West Flank SDD01 well location to perform four completion operations. The Maersk Explorer rig drilled the SDF01 lower section and moved to SDF02 well, where it is currently drilling the lower section of the well.
The above two rigs have already drilled 13 wells since the Final Investment Decision (FID) and completed four of these on the North Flank in preparation for the commencement of Shah Deniz Stage 2 and subsequent production ramp up. Drilling operations will continue to deliver all wells required to reach the planned plateau level.
During the first half of 2017, implementation of the Shah Deniz Stage 2 project continued successfully. The project is now over 95% complete in terms of engineering, procurement and construction, and remains on target for first gas from Shah Deniz Stage 2 in 2018.
Project activities continue at all offshore and onshore sites and fabrication yards of the country including the Sangachal Terminal, ATA (AMEC/Tekfen/Azfen) yard near Baku, Baku Deepwater Jackets Factory (BDJF) and along the pipeline route.
In June, a significant milestone was achieved in the project with the sail away and installation of the Quarters and Utilities (QU) platform topsides unit – the first topsides unit built for the Shah Deniz Stage 2 platforms. The official sail away ceremony was attended by H.E. President Ilham Aliyev of the Republic of Azerbaijan. Offshore, the topsides unit was successfully floated over and installed on top of the QU jacket which was already at its location in a water depth of 94 metres. The commissioning of the Production and Risers (PR) topsides unit at the ATA yard is 90% complete. The plan is to sail away this second topsides unit for offshore installation in the third quarter of 2017.
The construction and commissioning of the subsea construction vessel (SCV) “Khankendi” are progressing well at the Baku Shipyard. The vessel is currently undergoing sea trials in the Caspian Sea which is a significant milestone on SD2 project delivery.
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 SD2 gas volumes.
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 half of 2017, SCP spent about $14 million in operating expenditure and around $413 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 21.4 million cubic metres of gas per day during the first half 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.
In the first half of 2017, SCPX activities continued successfully along the pipeline route across Azerbaijan and Georgia. Overall, 96% of the construction and commissioning scope is already completed.
In Azerbaijan, mainline construction continues with approximately 370km of pipe welded and 263km of backfill complete. All five of the planned horizontal directional drilling activities have also been completed, the last one having been completed in April 2017.
In Georgia, mainline construction is complete with about 62km of pipe welded, coated, lowered into trenches and backfilled.
Hydro-testing of the pipeline is ongoing in both Azerbaijan and Georgia. Five hydro-test sections have been completed on the pipeline in Azerbaijan and 11 hydro-test sections have been completed in Georgia.
Construction works continue at the two compressor stations in Georgia, with 99% progress at the first and 82% at the second station achieved. Both stations are on track for 2018 start up. Metering station (Area 81) construction works are approximately 98% complete and on track for 2017 start-up.
The processing and interpretation of the 3D data acquired in 2016 from the Shallow Water Absheron Peninsula (SWAP) contract area is ongoing. The full processing is expected to complete by the third quarter of 2017, while the seismic interpretation will be completed by the fourth quarter of the year.
We also continue planning for the first exploration well on the Shafag-Asiman block.
At the end of the first half of 2017, the number of BP’s Azerbaijani national employees was 2,743 including fixed-term employees. 85% 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% 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% 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 2016, BP and the co-venturers in BP-operated joint ventures spent $1.51 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
Further information: Tamam Bayatly at BP’s Press Office in Baku.
Telephone: (+994 12) 599 45 57