2015 third quarter results

30 November 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).

In the first three quarters of 2015, we spent approximately $570 million in operating expenditure and $1.5 billion in capital expenditure on ACG activities. 

Production

During the first nine months of 2015, ACG continued to deliver stable production. Total ACG production for the three quarters was on average 640,000 barrels per day (b/d) (175 million barrels or 24 million tonnes in total) from the Chirag (54,000 b/d), Central Azeri (156,000 b/d), West Azeri (110,000 b/d), East Azeri (72,000 b/d), Deepwater Gunashli (141,000 b/d) and West Chirag (107,000 b/d) platforms. 

At the end of the third quarter, 88 oil wells were producing, while 42 wells were used for gas or water injection.

Drilling and completion

During the three quarters of 2015, ACG completed 13 oil producer wells and one water injection well.

Associated gas

During the first nine months, ACG delivered an average of 9.8 million cubic metres per day of ACG associated gas to SOCAR (2.7 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. 

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.


In the three quarters of 2015, the Sangachal terminal exported over 224 million barrels of oil and condensate. This included about 198 million barrels through Baku-Tbilisi-Ceyhan (BTC), about 23.6 million barrels through the Western Route Export Pipeline (WREP), 2.2 million barrels by rail and about 0.9 million barrels via a condensate export line.

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, 26.1 million standard cubic metres (923 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the first three quarters 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), CIECO (2.50 per cent) and ONGC (BTC) Limited (2.36 per cent).

During the three quarters of 2015, BTC spent approximately $106 million in operating expenditure and $32 million in capital expenditure.  

Since the 1,768km BTC pipeline became operational in June 2006 it has carried a total of about 2.3 billion barrels (around 307 million tonnes) of crude oil to be loaded on 3,026 tankers and sent to world markets.  

In the first three quarters, BTC exported about 198 million barrels (26.3 million tonnes) of crude oil loaded on 275 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 nine months of 2015, Shah Deniz spent approximately $370 million in operating expenditure and $3.37 billion in capital expenditure, the majority of which was associated with the Shah Deniz Stage 2 project.

Production

In the first nine 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 7.2 billion standard cubic metres (bcm) of gas and 1.66 million tonnes (about 13.4 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.

As part of the annual work programme, in August Shah Deniz implemented a planned Turn-around programme on the offshore platform, as well as on the Shah Deniz facility inside Sangachal Terminal. 

In accordance with the plan, production was suspended for about 20 days to enable efficient maintenance, inspection and project work to be undertaken on both offshore platform and onshore facilities in Sangachal. This work was completed safely and was designed to maintain the long-term ability of the Shah Deniz plant to produce and export hydrocarbons in a safe, reliable and environmentally sound way. 

Drilling

In the third quarter, the Shah Deniz Stage 1 platform continued drilling activities on SDA08 gas producer well and performed well-work activity on SDA07.

The Istiglal rig was transferred to the shipyard for rig certification and upgrade in July 2015.  The Heydar Aliyev rig continued drilling operations in SDD04 well in support of the Shah Deniz Stage 2 pre-drill programme. These two rigs have already drilled eight production wells in preparation for the first gas and consequent production ramp up. Drilling operations will continue in order to deliver all wells required to reach the planned plateau level.

Shah Deniz Stage 2 Project

In January to September, the Shah Deniz Stage 2 project continued to move ahead with a number of milestones achieved ahead of schedule.  The Shah Deniz 2 project is now over 50% complete in terms of engineering, procurement and construction, and remains on target for first gas in 2018.

Wide scale activities are currently 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 and along the pipeline route. A major construction milestone was achieved in the third quarter with the departure from Singapore of the two hull sections for the subsea construction vessel – Khankendi, which is being built at Baku Shipyard.  The sections, weighing a total of 10,800 tonnes, are 140 metres long, 16 metres wide and 17 metres high. Once completed, this new vessel will be deployed to the Shah Deniz 2 area for the construction of the subsea structures.

In Azerbaijan, over 18,000 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 nine months of 2015, SCP spent about $32 million in operating expenditure and $835 million in capital expenditure. 

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

In the three quarters, SCP’s daily average throughput was 17.8 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 nine months 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 half of the pipe needed for the Azerbaijan section already in the yards. 
Since the mainline construction in Azerbaijan commenced at the end of June, pipeline construction has continued to ramp up and approximately 61km of pipe has now been welded and a further 2km strung out along the right of way ahead of time. 

Other key achievements to date include:
  • Acquisition of land for the right of way in Azerbaijan is 99.7% complete
  • Mainline pipeline construction in Georgia started in July
  • Construction of compressor stations 1 and 2 and the pressure regulating and metering facility in Georgia is ongoing

Exploration

With the completion of the Shafag-Asiman 3D seismic dataset interpretation earlier this year, work has commenced on planning for the first exploration well. This work is expected to take about 12 months.

Planning has also commenced for a 3D seismic acquisition programme for the Shallow Water Absheron Peninsula (SWAP) contract area following ratification of the production sharing agreement in May 2015.

People

At the end of the third quarter, BP employed directly 2,865 Azerbaijani nationals. Some 87% 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, support for cultural legacy and sport, as well as technical assistance to public institutions.

During the first three quarters of 2015, BP and co-venturers spent $4.52 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.
  • 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 and its co-venturers are also co-operating with SOCAR in the training and development of national workforce and in the human resources area. The 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 and co-venturers have already provided vocational and technical discipline training support for a large group of representatives of the local communities residing in the neighbourhood of the Sangachal Terminal - Sangachal, Umid, Azimkend and Gobustan settlements. BP and co-venturers plan to continue this support.
  • 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’s ‘Business Journalism’ training programme to help develop national business journalism capacity and link local journalists with international journalistic standards. Some 12 journalists gained international practice through this training programme.
  • 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