BP Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.
In the first quarter of 2016, we spent approximately $137 million in operating expenditure and $396 million in capital expenditure on ACG activities.
In the first quarter, ACG continued to safely and reliably deliver stable production. Total ACG production for the quarter was on average 651,000 barrels per day (b/d) (over 59 million barrels or 8 million tonnes in total) from the Chirag (46,000 b/d), Central Azeri (155,000 b/d), West Azeri (116,000 b/d), East Azeri (69,000 b/d), Deepwater Gunashli (139,000 b/d) and West Chirag (126,000 b/d) platforms.
At the end of the first quarter of 2016, 95 oil wells were producing, while 41 wells were used for gas or water injection.
Drilling and completion
ACG completed 5 oil producer wells and 2 water injection wells during the first quarter of 2016
In the first quarter of 2016, ACG delivered an average of 7.6 million cubic metres per day of ACG associated gas to SOCAR (692 million 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.
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.
In the first quarter of 2016, the Sangachal Terminal exported about 75 million barrels of oil and condensate. This included around 67 million barrels through Baku-Tbilisi-Ceyhan (BTC) and more than 8 million barrels through the Western Route Export Pipeline (WREP).
Gas is exported via the South Caucasus Pipeline (SCP) and via a SOCAR gas pipeline connecting the Terminal’s gas processing facilities with Azerigas’s national grid system.
On average, 29.4 million standard cubic metres (around 1039 million standard cubic feet) of Shah Deniz gas was exported from the Terminal daily during the first quarter.
During the first quarter of 2016, BTC spent approximately $29 million in operating expenditure and $11 million in capital expenditure.
Since the 1,768km BTC pipeline became operational in June 2006 it has carried a total of about 2.43 billion barrels (around 324 million tonnes) of crude oil loaded on 3,194 tankers and sent to world markets.
In the first quarter of 2016, BTC exported around 67 million barrels (about 9 million tonnes) of crude oil loaded on 82 tankers at Ceyhan.
The BTC pipeline currently carries mainly ACG crude oil and Shah Deniz condensate from Azerbaijan. In addition, other crude oil and condensate continue to be transported via BTC, including volumes from Turkmenistan and Kazakhstan.
In the first quarter of 2016, Shah Deniz spent approximately $116 million in operating expenditure and about $928 million in capital expenditure, the majority of which was associated with the Shah Deniz Stage 2 project.
In the first quarter, the Shah Deniz field continued to provide reliable deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC), BTC Company and Turkey (to BOTAS).
During this period, the field produced about 2.7 billion standard cubic metres (bcm) of gas and 0.6 million tonnes (about 5 million barrels) of condensate.
The existing Shah Deniz facilities’ production capacity is currently 29.5 million standard cubic metres of gas per day or around 10.8bcma.
During the first quarter of 2016, the top hole sections of two gas producer wells (SDA09 and SDA10) were drilled for Shah Deniz Stage 1.
The Istiglal rig is currently at the shipyard for major upgrade and certification work. This work is expected to be complete in the second quarter of 2016. The Heydar Aliyev rig completed SDG02 well to 10” liner and then moved to drill the same section on SDG04 well in the first quarter of 2016. These two rigs have already drilled nine production wells in preparation for the first gas from Shah Deniz Stage 2 and subsequent production ramp up. Drilling operations will continue in order to deliver all wells required to reach the planned plateau level.
In the first quarter of 2016, implementation of the Shah Deniz Stage 2 project continued successfully. The project is now over 70% 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 and along the pipeline route.
The pipe-lay barge Israfil Huseynov has installed about 40 kilometers of the 32-inch subsea export pipeline in accordance with the plan.
In the first quarter of 2016, we also started commissioning activities on the two Shah Deniz 2 topside units at the ATA yard and nearly all of the 50 living quarter modules have already been installed on the quarters and utilities platform. The integration of the hull strips and bow blocks of the subsea construction vessel Khankendi is now complete, with the launch of the vessel out of the dry dock at the Baku Shipyard planned for May. Once completed, this new vessel will be deployed to the Shah Deniz 2 area for the construction of the subsea structures.
In the first quarter of 2016, over 22,000 people were involved in construction activities across all main contracts in Azerbaijan and over 80% of them were Azerbaijani nationals.
In the first quarter of 2016, SCP spent about $6 million in operating expenditure and around $236 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 21.6 million cubic metres of gas per day in the first quarter.
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 quarter of 2016, SCPX activities continued along the pipeline route across Azerbaijan and Georgia.
In Azerbaijan, mainline construction continued to ramp up with approximately 83km of pipe welded, 57km of pipe coated and 36km of pipe lowered into trenches. Trenching, lowering, laying and backfilling activities are progressing. Stocks of pipe have been building up at the pipe yards along the route with more than 80% of the pipe needed for the Azerbaijan section already stored at Mugan, Kurdamir, Yevlakh, Qazanchi and Dallar pipe yards. The first horizontal directional drilling site at Agsu Canal has been completed and the works are underway for the second drilling at Goychay.
In Georgia, trenching, lowering and lay activities commenced during the first quarter. Mainline construction continued to ramp up with nearly 34km of pipe welded and more than 10km coated. Construction works have continued at both of the compressor stations, with 42% progress at the first and 12% at the second station achieved. Metering station (Area 81) construction works are approximately 26% complete and on track for 2018 completion.
Final interpretation of the Shafag-Asiman 3D seismic dataset was completed during the first quarter of 2016 and work has commenced on planning for the first exploration well on the structure.
The 2D seismic survey in the Shallow Water Absheron Peninsula (SWAP) contract area was safely completed in December 2015. This was followed by data processing, planned to be completed in May. We will then commence interpretation of the 2D seismic dataset. Planning for the 3D seismic acquisition programme for the area has been completed, with acquisition scheduled to start in the second quarter of 2016.
At the end of the first quarter of 2016, the number of BP’s Azerbaijani national employees was 2,926, including fixed-term employees. 85% of BP’s professional employees in Azerbaijan are nationals and many of them are in senior positions, including five 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 in order to further improve the local talent market.
As part of the nationalization plan, effective 1 January 2016, Elkhan Mammadov was appointed Vice-President for Production. This new appointment marks the first national vice-president role with a technical portfolio of responsibilities in BP Azerbaijan. Another new appointment was Orkhan Guliyev’s announcement as Vice-President for Safety and Operational Risk, which will be effective June 2016.
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.
During the first quarter of 2016, BP and the co-venturers in BP-operated joint ventures spent $0.34 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