2015 first half results

10 August 2015

Azeri-Chirag-Deepwater Gunashli (ACG)

ACG participating interests are: BP (operator – 35.8 per cent), SOCAR (11.6 per cent), Chevron (11.3 per cent), INPEX (11 per cent), Statoil (8.6 per cent), ExxonMobil (8 per cent), TPAO (6.8 per cent), ITOCHU (4.3 per cent), ONGC Videsh Limited (OVL) (2.7 per cent).

During the first half of 2015, we spent approximately $359 million in operating expenditure and $949 million in capital expenditure on ACG activities.

Production

During the first half of 2015, ACG continued to deliver stable production. Total ACG production in the first six months was on average 641,000 barrels per day (b/d) (116 million barrels or 16 million tonnes in total) from the Chirag (55,000 b/d), Central Azeri (157,000 b/d), West Azeri (107,000 b/d), East Azeri (71,000 b/d), Deepwater Gunashli (145,000 b/d) and West Chirag (106,000 b/d) platforms. 

As part of its ACG annual work programme, we implemented a planned facility shut down programme (turnaround - TAR) on the West Azeri platform in May. 

In accordance with the plan, production from the West Azeri platform was suspended in May for about 22 days to enable efficient maintenance, inspection and project work to be undertaken. This work was completed safely and is designed to maintain the long-term ability of the platform to produce in a safe, reliable and environmentally sound way. 

At the end of the second quarter, 87 oil wells were producing, while 40 wells were used for gas or water injection. 

Drilling and completion

During the first half of 2015, ACG delivered nine oil producer wells and one water injector. 

Associated gas

During the first six months, ACG delivered an average of 11.4 million cubic metres per day of ACG associated gas to SOCAR (2.1 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 mainly re-injected for reservoir pressure maintenance.

The Sangachal terminal

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 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.

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. 

In the first half of 2015, the Sangachal terminal exported about 154 million barrels of oil and condensate. This included about 135 million barrels through Baku-Tbilisi-Ceyhan (BTC), over 16.3 million barrels through the Western Route Export Pipeline (WREP), about 2.2 million barrels by rail and about 0.9 million barrels via a condensate export line.

On average, 28.8 million standard cubic metres (1,017 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the first half of 2015.

Baku-Tbilisi-Ceyhan (BTC)

The BTC Co. shareholders are: BP (30.1 per cent); AzBTC (25.00 per cent); Chevron (8.90 per cent); Statoil (8.71 per cent); TPAO (6.53 per cent); ENI (5.00 per cent); Total (5.00 per cent), ITOCHU (3.40 per cent); INPEX (2.50 per cent), ConocoPhillips (2.50 per cent) and ONGC (BTC) Limited (2.36 per cent).

During the first half of 2015, BTC spent approximately $73 million in operating expenditure and $15 million in capital expenditure.  

BTC’s throughput capacity is currently 1.2 million barrels per day.

The 1,768km BTC pipeline became operational in June 2006. Since that time BTC has carried a total of 2.23 billion barrels (around 298 million tonnes) of crude oil loaded on 2,940 tankers and sent to world markets.  

In the first half, BTC exported about 135 million barrels (18 million tonnes) of crude oil loaded on 188 tankers at Ceyhan.

The BTC pipeline currently carries mainly ACG oil and Shah Deniz condensate from Azerbaijan. In addition, crude oil from Turkmenistan and Kazakhstan continues to be transported via BTC. 

Shah Deniz

Shah Deniz participating interests are: BP (operator – 28.8 per cent), AzSD (10.0 per cent), SGC Upstream (6.7 per cent), Petronas (15.5 per cent), Lukoil (10 per cent), NICO (10 per cent) and TPAO (19 per cent).

During the first half of 2015, Shah Deniz spent approximately $0.25 billion in operating expenditure and $2.26 billion in capital expenditure, the majority of which was associated with the Shah Deniz Stage 2 project.

Production

In the first six months, 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 5.2 billion standard cubic metres (bcm) of gas and 1.2 million tonnes (about 9.8 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 10bcma.

Drilling

In the second quarter, the existing Shah Deniz Stage 1 platform completed the SDA07 gas producer well and continued drilling another production well, whilst the Istiglal and Heydar Aliyev rigs continued drilling operations in support of the Shah Deniz Stage 2 pre-drill programme. The Istiglal rig was transferred to the shipyard for rig certification and upgrade in July 2015. The Heydar Aliyev rig will continue drilling activities. These two rigs have already drilled eight production wells in preparation for the first gas and consequent production ramp up. Drilling operations will continue towards delivery of all wells required to reach the planned plateau level.

Shah Deniz Stage 2 Project

In the first half, the Shah Deniz Stage 2 project continued to move ahead with a number of milestones achieved ahead of schedule. 

The project is currently progressing at pace with wide scale activities ongoing at all offshore and onshore sites/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 particular, the platform decks and jackets are taking shape at the ATA and BDJF yards, respectively. 

A major milestone was the safe and successful transportation and installation of the project’s first pin piles. These eight pin piles are the first pieces of permanent equipment for the platforms now fixed on the seabed.

The project has already awarded the major engineering, construction and supply contracts, valued at about $11 billion. Two further contracts were awarded in June, in support of the development of future flanks following first gas in 2018. 

In Azerbaijan, over 15,000 people are involved in construction activities across all main contracts and over 85% of them are Azerbaijani nationals.

The South Caucasus Pipeline (SCP)

The SCP Co. shareholders are: BP (28.8 per cent), AzSCP (10.0 per cent), SGC Midstream (6.7 per cent), Petronas (15.5 per cent), Lukoil (10 per cent), NICO (10 per cent) and TPAO (19 per cent)

In the first half of 2015, SCP spent about $22 million in operating expenditure and $559 million in capital expenditure. 

The pipeline has been operational since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey. 

In the first half, SCP’s daily average throughput was 20.34 million cubic metres of gas per day. 

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, is responsible for SCP's business administration. 

SCP Expansion (SCPX) Project

In the first half of 2015, SCPX activities continued along the pipeline route across Azerbaijan and Georgia. Stocks of pipe have been building up at the pipe yards along the route with more than one-third of the pipe needed for the Azerbaijan section already in the yards. 

A major milestone was achieved during the first half of 2015 with commencing the mainline construction in Azerbaijan at the end of June. Since then, pipeline construction has continued to ramp up and approximately 10km of pipe has now been welded and a further 7km strung out along the right of way ahead of time. 

Other key achievements to date include:
  • Acquisition of land for the first 200km right of way in Azerbaijan is complete. Land acquisition for the remaining part of the route is underway
  • Construction of compressor stations 1 and 2 and the pressure regulating and metering facility in Georgia is ongoing
  • Preparations for the start of mainline pipeline construction in Georgia are well underway

Exploration

In the first half of 2015, BP completed the interpretation of the seismic dataset for Shafag-Asiman. This work required some 18 months to complete and is followed by another year required for planning of the first exploration well. 

BP also signed a new production sharing agreement (PSA) with SOCAR in December 2014 to jointly explore for and develop potential prospects in the shallow water area around the Absheron Peninsula in the Azerbaijan sector of the Caspian Sea. This PSA was ratified by the Milli Majlis (Parliament of Azerbaijan) on 14 April 2015. This enables BP to move forward with its commitments under this PSA using its experience and advanced technology solutions from other shallow water areas around the world. 

People

At the end of the second quarter, BP employed directly 2,866 Azerbaijani nationals. Some 86% of BP’s permanent professionals in Azerbaijan are nationals and many of them are in senior leadership positions. 

BP continues to focus on the training of nationals including technicians who are trained in the Caspian Technicians Training Centre (CTTC). Over the 10 years of its existence CTTC has successfully trained more than 1,000 national technicians for BP-operated facilities. The role of these highly qualified technicians is critical to running all of BP-operated facilities both onshore and offshore safely and reliably. 

BP also continues the training of selected national engineers through the world-class training initiative called “Petro-technical Resource Entry Programme” (PREP). This is a multi-million dollar learning programme designed for national petro-technical graduates and is aimed at supporting capability development of young engineers joining BP. 

In addition, BP remains committed to achieving a target to reach 90% professional staff nationalization rate by the end of 2018. This envisages nationalizing some of the professional roles that are currently occupied by the expatriate staff. Non-professional staff is already 100% nationalized. The nationalization agenda also includes further optimization of BP’s learning and development programmes, close participation in the public and private sector initiatives in order to further improve the local talent market and enhancing the rigorous internal performance management process.

Sustainable Development Initiatives

The success of BP-operated projects in the Caspian, in part, depends on the operator’s ability to create tangible benefits from these projects for the people of the regional countries. To achieve this, BP continues to implement major sustainable development initiatives, 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, as well as technical assistance to public institutions.

During the first half of 2015, BP and co-venturers spent $2.56 million in Azerbaijan alone on such sustainable development projects.

BP and its co-venturers will continue their sustainable development initiatives to support local enterprise development and capacity-building throughout Azerbaijan to assist the country in strengthening its economy. 

Some examples of such initiatives are:
  • BP and its co-venturers’ Enterprise Development and Training Programme (EDTP) which is a multi-million dollar initiative in support of local business development. The programme is part of BP’s and its co-venturers’ efforts to increase the local content of their contracts in Azerbaijan and contribute to the healthy and transparent development of local economy. Since its start the EDTP has aimed to contribute to the broadening of Azerbaijan’s economic base and to enhance the capacity of local firms to compete in domestic markets and the wider Caspian region and beyond. The EDTP has proven to be an excellent opportunity for local enterprises to reach international standards and compete for supply contracts in the oil and gas industry. As part of this support, BP and its co-venturers also hosted a series of ‘Meet the Buyer’ events to provide additional opportunities for local companies to enhance their capabilities, develop their business and build relationship with their potential clients. In addition, for a number of years BP and its co-venturers sponsored a group of most successful local companies’ participation in the annual Caspian International Oil Exhibitions in Baku
  • The School of Project Management (SPM) established by BP and its co-venturers in Azerbaijan. The school is designed to develop project management capabilities of individuals representing the private and public sectors. In March 2014, BP and its co-venturers extended their support for the SPM until November 2015 by signing a new Memorandum of Understanding on extension of the initiative.
  • BP on behalf of its co-venturers and UNICEF have committed to cooperating within a planned major educational initiative called “Partners in Education”. This is designed to support the country in initiating and implementing projects aimed at creating new educational models. The two parties have signed an MOU (Memorandum of Understanding) to work together with other stakeholders, which include the Ministry of Education and the Ministry of Emergency Situations, to develop new effective school models. The scope of the project specifically focuses on the establishment of new comprehensive child-seeking school models in the Kurdamir, Ujar, Agdash, Yevlakh, Samux, Goranboy, Shamkir and Tovuz districts along the BP-operated BTC and SCP pipelines.
  • BP was an Official Partner of the Baku 2015 European Games. This allowed BP to assist elite athlete development in Azerbaijan and to support a group of national athletes. As part of this partnership BP continued to help fund the development of aspiring medal hopes for Azerbaijan. In addition, as part of this project, BP was the exclusive Official Partner of the Baku 2015 Games Academy initiative, an innovative learning programme which supported the creation of a capability legacy in Azerbaijan. For more information please visit: bp.com/baku2015.
  • BP's ongoing support for the Baku-based Qafqaz University to broaden its scope to cover undergraduate education in three engineering disciplines, including chemical, mechanical and civil engineering. As part of this project the chemical engineering department was established in 2009 and in 2011, BP opened five fully equipped modern laboratories for this department. In 2011, the mechanical engineering department was opened at the university and in December 2013, BP presented eleven world-class laboratories to this department.
  • BP is also co-operating with SOCAR in the training and development of national workforce and in the human resources area. The two companies continue to work together to create training and development opportunities for Azerbaijani nationals specializing in the oil and gas industry related disciplines. As part of this commitment BP has already provided vocational and technical discipline training support for about 90 representatives of the local communities residing in the neighbourhood of the Sangachal Terminal - Sangachal, Umid, Azimkend and Gobustan settlements. BP plans to continue this support.
  • BP’s ‘Business Journalism’ training programme to help develop national business journalism capacity and link local journalists with international journalistic standards. The training helped some 12 journalists gain international practice and become leading business writers in the region. They have created a trend in national business journalism, which has many followers.
  • BP’s business lectures at Baku Higher Oil School, which are designed to support national petroleum engineers’ development in Azerbaijan. In addition to a series of lectures presented by BP experts and senior executives, Gordon Birrell, BP’s Regional President for Azerbaijan, Georgia and Turkey, has met with the teaching staff and students of Baku Higher Oil School sharing his own experience in the industry and information about BP operations and plans.

Presentation slides

For further information please contact:
Tamam Bayatly, BP Baku Press office, telephone:      994 (0) 12 599 4557