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2020 first quarter results

Release date:
12 May 2020
Azeri-Chirag-Deepwater Gunashli (ACG)

 

ACG participating interests are: BP (30.37%), SOCAR (25.0%), MOL (replaced Chevron as of 16 April 2020 (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 quarter of 2020, we spent about $150 million in operating expenditure and about $522 million in capital expenditure on ACG activities.

 

During the quarter ACE (Azeri Central East) platform topsides and drilling fabrication activities continued at the Bibi-Heybat fabrication yard. However, the pandemic related restrictions started to cause delays in materials and major equipment deliveries towards the end of the quarter resulting in pauses of activities.   The living quarters module fabrication progressed in Sweden.

 

The jacket fabrication also progressed at the Heydar Aliyev Baku Deepwater Jackets Factory (BDJF). The fabrication of the jacket pin piles is complete for installation later in the year. The subsea fabrication has commenced at BDJF with the subsea pipe coating currently ongoing at Caspian Pipe Coating (CPC).

 

Production

 

During the first quarter, ACG continued to safely and reliably deliver stable production. Total ACG production for the quarter was on average about 524,000 barrels per day (b/d) (about 48 million barrels or more than 6.4 million tonnes in total) from the Chirag (39,000 b/d), Central Azeri (136,000 b/d), West Azeri (125,000 b/d), East Azeri (78,000 b/d), Deepwater Gunashli (95,000 b/d) and West Chirag (51,000 b/d) platforms.

 

At the end of the quarter, 129 oil wells were producing, while 42 wells were used for water and seven for gas injection.

 

Drilling and completion

 

In the first quarter of 2020, ACG completed four oil producer wells.

 

Associated gas

 

During the first quarter, ACG delivered an average of 7.9 million cubic metres per day of ACG associated gas to SOCAR (0.7 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.

 

Sangachal terminal

 

In the first quarter of 2020, 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 85 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 105 million standard cubic metres per day.

 

During the quarter, the Sangachal terminal exported about 66 million barrels of oil and condensate. This included about 58 million barrels through Baku-Tbilisi-Ceyhan (BTC) and over 8 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, more than 51 million standard cubic metres (about 1,800 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily in in the first quarter of 2020.

 

Baku-Tbilisi-Ceyhan (BTC)

The BTC Co. shareholders are: BP (30.1%); AzBTC (25.00%); MOL (replaced Chevron as of 16 April 2020 (8.90%); Equinor (8.71%); TPAO (6.53%);

 

In the first quarter of 2020, BTC spent approximately $25 million in operating expenditure and about $3 million
in capital expenditure.

 

Since the 1,768 km BTC pipeline became operational in June 2006 till the end of the first quarter of 2020, it carried a total of 3.41 billion barrels (more than 455 million tonnes) of crude oil loaded on 4,457 tankers and sent to world markets.

 

In the first quarter, BTC exported more than 58 million barrels (about 7.7 million tonnes) of crude oil loaded on 76 tankers at Ceyhan.

 

The BTC pipeline currently carries mainly ACG crude oil and Shah Deniz condensate from Azerbaijan. Inaddition, other volumes of crude oil and condensate continue to be transported via BTC, including volumes from Turkmenistan, Russia and Kazakhstan.

 

 

Shah Deniz

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

 

In the first quarter of 2020, Shah Deniz spent about $219 million in operating expenditure and $219 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 SOCAR), Georgia (to GOGC and SOCAR), Turkey (to BOTAS) and to BTC Company in multiple locations.

 

In the first three months of 2020, the field produced around 4.7 billion standard cubic metres (bcm) of gas and 1 million tonnes (7.7 million barrels) of condensate in total from the Shah Deniz Alpha and Shah Deniz Bravo platforms.

 

Production from ShahDeniz Bravo has been ramping up since the first gas delivery at the end of July 2018.

 

The existing Shah Deniz facilities’ production capacity is currently over 56 million standard cubic metres of gas per day or more than 20 bcma.

 

The Shah Deniz 2 project

 

During the first quarter of 2020, the Shah Deniz 2 project team continued with offshore construction scope to achieve start-up from the East South flank in 2021. Subsea infrastructure installation is being executed using the Subsea Construction Vessel Khankendi
and the pipelay barge Israfil Huseynov in support of delivering plateau gasproduction from the Shah Deniz field over the coming years.

 

Drilling

 

During the first quarter of the year, Shah Deniz Alpha platform rig was on warm stack.

 

The Istiglal rig commenced drilling the lower section of the SDC05 well. The Maersk Explorer rig continues with the SDF04 well operations. already drilled 17 wells in total, and completed 16 out of those, for Shah Deniz 2 production and subsequent ramp up. The completed wells include four wells on the North Flank, four wells on the West Flank, four wells on the East South Flank, two wells on the West South Flank and two wells on the East North flank. One well on the West South flank was drilled to its final depth and
suspended. Drilling operations will continue to deliver all wells required toramp up to the plateau level.

The South Caucasus Pipeline (SCP)

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

 

 

In the first quarter of 2020, SCP spent about $12 million in operating expenditure and about $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.

 

During the quarter, the daily average throughput of SCP was 33.6 million cubic metres of gas per day.

 

Exploration

 

On the Shafag-Asiman offshore block, the first exploration well was spudded on 13 January 2020. Once completed, the well data will be analysed and, if successful, an evaluation programme may be conducted to confirm the results.

 

On D230, a 3D seismic acquisition programme, which commenced in December 2019, was successfully completed on 14 March 2020. The processing of the acquired data has started and will be followed by interpretation. If the results from the interpretation of the seismic survey are positive, we will begin planning for the first exploration well.

 

In the Shallow Water Absheron Peninsula planning for the exploration wells drilling in three selected prospective areas is ongoing.  We will commence drilling activities early next year once the upgrade of the rig selected to drill the first well is completed.

 

People

At the end of the first quarter of 2020, the number of BP’s Azerbaijani national employees was 2,517 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.

 

Social Investment

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 quarter of 2020, BP and the co-venturers in BP-operated joint ventures spent $1.0 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:

 

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting a programme aimed at enhancing employment opportunities for people with disabilities in Azerbaijan. The programme called “Enhancing employability skills for people with disabilities” aims to develop skills and capabilities of selected people with disabilities through trainings and other specialised activities. The project also provides psychological counselling sessions to enhance the participants’ self-confidence. The first phase of this project ended in January 2019 and it moved to Phase 2 in July. Inthis new phase of the project the training programme has been expanded in order to further enhance employment opportunities for the participants. In 2019, BP Azerbaijan developed a special work placement programme and provided an opportunity for selected 9 participants from Phase 1 of the project to engage in an international working environment practicing their new skills and learning from experienced BP staff. Currently, the project continues in Phase 2
with 95 participants in attendance.

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 quarter of 2020,
three local companies enrolled for the programme joining the 48 existing participants.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting secondary schools in enhancing IT skills teaching. As part of this 3-year initiative, a new curriculum for IT specialised secondary schools has been developed in cooperation with the Ministry of Education. In addition, 50 teachers representing 25 Baku schools have been were trained to pilot and effectively use the new curriculum. On the basis of the new curriculum, new teaching and learning materials including textbooks for the 10th and
11th grades have been developed ready to be printed.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is involved in the “Build your Future” project to support a large group of 11th grade students in their preparation for university admission exams. The participants in the project are selected from disadvantaged families. The project activities include two components– academic knowledge and social integration. In total, some 188 young people out of 207 participants in the past three academic years (91%) have been successful, meeting the requirements of the higher school entrance exams and becoming students. The project is currently ongoing with a new group of participants (115 participants) targeting the university exams of 2020.

BP (on behalf of the co-venturers in the South Caucasus Pipeline Company) implemented a project to establish early intervention and pre-school services in 13 districts along the pipeline route and beyond - Hajigabul, Kurdamir, Agdash, Ujar, Yevlakh, Samukh, Goranboy, Shamkir, Tovuz, Agstafa, Agsu, Gobustan and Shirvan.  The project was implemented in 3 phases in 2016-2019 with successful completion in 2019.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting 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 is for three years - 2018-2020 aiming to benefit over
500 community members and to achieve the planting of over 110000 nectar trees for bee-breeding. To date over 60000 nectar trees have already been planted and over 400 new project beneficiaries have been selected.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting Baku Engineering University by purchasing materials for chemical experiments and installing new equipment in the 11 laboratories earlier established at that university by BP. In addition, the project scope includes the translation from English into Azerbaijani of learning materials for the Chemical Engineering Department. The project is expected to benefit more than 400 students every year.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) supported an initiative to raise the quality of care for children with disabilities and their families by offering training opportunities for specialists from the health, education and social services sectors. The project was completed successfully early 2020. The initiative resulted in establishing a new training programme - “Course for Childhood Health, Education and Social Development (CHED)”, certified by Georgetown University (USA). The programme, which is managed  by the “CHED faculty”, is comprised of local and international experts who will provide training to over 40 local child  care specialists annually.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting a project to improve the capability of up to 60 childdevelopment specialists through provision of trainings in physiotherapy. These specialists are expected to work in total with up to 300 children with disabilities.  To date, more than a third of training materials about rehabilitation methods for treatment of
developmental delays and disabilities has been prepared and presented to programme participants.

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) is supporting “English for Engineers Project” which intends to enhance English language knowledge of teachers and students of the Azerbaijan State Oil and Industry University. The project
helps educational capacity-building, as well as improves the university’s international co-operation. To date, 18 English language teachers have successfully completed  “Train-the-Trainers” courses. Classes for 200 students selected for the programme will commence later this year.

 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-recognised Adaptive Strategic Execution Programme to Azerbaijan, basing it at Baku’s ADA University. Overall six streams are planned within the duration of the project covering a total of up to 108 students. Two streams with a total of 44 participants are currently ongoing. 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 (Duke CE), a leader in providing executive education globally. The project is designed to help meet the current market demand in executive education. 

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) commenced a social infrastructure development project in September 2019 to support local communities in Hajigabul and Kurdemir in getting access to improved infrastructure. As part
of this project three kindergartens (one in Hajigabul and two in Kurdemir) are being renovated.

 BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) are implementing a project to support development of micro-entrepreneurial skills and capabilities of rural women and enhance their self-employment opportunities by setting up a Community Family Support Club in the Tovuz district. The Club, whose staff have already been recruited and trained, will also provide daily care services to the children of vulnerable women. To date, theproject has selected over 20 women who will be trained on entrepreneurship and will be provided with equipment to support their self-employment efforts.

 BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) are 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. The degree programme will be comprised of five semesters of which three semesters will take place in Baku and two semesters in Washington DC. The application process has already started for the first semester.

 BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) have recently commenced a social project which aims to strengthen project management capabilities of over 10 local universities. Participants in the project will be trained to become internationally certified project management specialists (Certified International Project Management Associates, Level D) and make up project management teams in their respective universities. The project also envisages to produce a project management textbook in Azerbaijani to be used by local universities. 15 local universities are expected to benefit from this project.

 

BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) have launched a pre-school educational project which will bring together a group of
local experts to develop a learning material 
for parents, childcare specialists and pre-school teachers. The learning
material, comprised of 12 sections, will provide recommendations and guidance
on effective care of children from birth to school age.

 

In addition, in the first quarter of 2020, BP alone spent $0.5 million
on sponsorship projects in Azerbaijan. These 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 translation of three 
books have been completed and donated to local universities and
libraries.

BP is supporting an initiative to
enhance the quality of education at the Azerbaijan State University of
Economics (UNEC) through funding the establishment of three research
laboratories related to the themes of food chemistry, food technology and
ecology. The laboratories will be incorporated into graduate and undergraduate
educational programmes of the university and will support the university in its
efforts to provide the labour market with qualified workforce.

 

BP’s ongoing support
for the development of sport through its partnership with Azerbaijan’s National
Olympic and Paralympic Committees. As part of this partnership, BP funds a
series of development programmes and supports a group of national athletes. In
2016 BP extended its partnership agreement to support Azerbaijan’s national
teams, both National Committees and a group of seven national athletes until the
end of 2020.

BP is funding the upgrade of at
Baku State University’s (BSU) publishing house. The project supports the
university’s efforts to improve the quality of its publications, to publish
research findings of the teaching staff and students, and to provide the
students majoring in publishing and editing, as well as journalism and
philology with an internship opportunity.

BP is supporting a youth project called “Yuksel” to help students and
young people realize their professional dreams and develop individual
qualities. The main idea of the project is to inspire young people to success
and achievements. As part of the project, renowned people and well known
specialists, who can serve as role models for young people, will lead workshops
at Baku Book Centre every week and will present their audience with books
purchased by BP on the subjects they cover at the workshops.

BP sponsored the “2nd congress for kids with special needs” held in
Baku. The theme of the congress, which brought together world-famous experts
from Azerbaijan, USA, UK, Italy, Greece, Turkey and Russia, was autism.

BP supported the national
competition “Scientists of Tomorrow” which covers  such disciplines as mathematics, physics,
chemistry, biology, medicine and health, ecology, engineering and computer
science. The competition has been held annually since 2012. It aims to develop
scientific potential of the youth by exposing them to different scientific
research activities, as well as helping select the most successful students for
further participation in the annual International Science and Engineering Fair
(ISEF) in the United States.

BP sponsored an international
symposium on “Industrial commitments: archaeology and contribution to cultural
heritage” and the second Republican Customs Forum: Foreign Trade Participants
organized by the State Customs Committee of Azerbaijan.

 

BP also sponsored the Azerbaijani National Rounds of the “2020 Philip
C. Jessup International Law Moot Court Competition”. The 2020 Jessup Problem challenges teams
to address the legal issues surrounding treaty succession, fully autonomous
weapons systems, government ministers accused of war crimes, and the
potentially conflicting jurisdiction of the International Court of Justice and
the World Trade Organization.

BP is funding the “Management and business skills for young engineers”
programme for Baku Higher Oil School. This is a comprehensive training
programme that will equip young engineers with analytical tools and techniques
to improve internal and external operations. The students will develop skills
in the analysis and evaluation of complex business problems and gain a
methodical approach to problem solving and decision making. The curriculum
consists of eight core modules.

BP also sponsored the Enactus Azerbaijan Winter School which promotes
entrepreneurship by developing students’ business skills. Enactus teams from 23
local universities, a total of 150 people, participated in the Winter School.  The universities winning annual competitions
in different countries represent their country and university in the Enactus
Global competition held in various countries around the world.

BP sponsored AmCham Azerbaijan and AIPN CIS-FSU Chapter’s joint event
on “AIPN Model Contracts”. The main objective was to discuss the common AIPN
contracts used in oil and gas industry in Azerbaijan and internationally.

BP relaunched its bursary progamme in late 2019. The programme aims to
improve English language skills of the 2nd year students representing
petrochemical universities. This will enable the students to pursue their
career ambitions more confidently with improved English language skills.
Currently about 30 students from different universities are taking part in the
programme.

Further information: Tamam Bayatly at BP’s Press Office in Baku.

Telephone: (+994 12) 525 58 95