2015 year-end results

29 February 2016

Azeri-Chirag-Deepwater Gunashli (ACG)

ACG participating interests are: BP (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).

BP Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.

In 2015, we spent approximately $760 million in operating expenditure and $1.9 billion in capital expenditure on ACG activities

Production

In 2015, ACG continued to safely and reliably deliver stable production. Total ACG production for the full year was on average 634,000 barrels per day (b/d) (over 231 million barrels or 31.3 million tonnes in total) from the Chirag (48,000 b/d), Central Azeri (154,000 b/d), West Azeri (110,300 b/d), East Azeri (71,000 b/d), Deepwater Gunashli (141,400 b/d) and West Chirag (109,400 b/d) platforms. 

At the end of the year, 91 oil wells were producing, while 42 wells were used for gas or water injection. 

Drilling and completion

In 2015, ACG completed 15 oil producer wells and 2 water injection wells.

Associated gas

Associated gas
During 2015, ACG delivered an average of 8.9 million cubic metres per day of ACG associated gas to SOCAR (3.2 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 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 2015, the Sangachal Terminal exported over 296 million barrels of oil and condensate. This included about 261.6 million barrels through Baku-Tbilisi-Ceyhan (BTC), about 31.4 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, 26.9 million standard cubic metres (949.5 million standard cubic feet) of Shah Deniz gas was exported from the Terminal daily during the year 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 2015, BTC spent approximately $155 million in operating expenditure and $57 million in capital expenditure.  

Since the 1,768km BTC pipeline became operational in June 2006 it has carried a total of about 2.36 billion barrels (around 315 million tonnes) of crude oil loaded on 3,112 tankers and sent to world markets.  

In 2015, BTC exported 262.8 million barrels (35 million tonnes) of crude oil loaded on 361 tankers at Ceyhan.

The BTC pipeline currently carries mainly ACG crude oil and Shah Deniz condensate from Azerbaijan. In addition, crude oil and condensate from Turkmenistan and Kazakhstan continue 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).

In 2015, Shah Deniz spent approximately $482 million in operating expenditure and $4.37 billion in capital expenditure, the majority of which was associated with the Shah Deniz Stage 2 project.

Production

In Azerbaijan (to SOCAR), Georgia (to GOGC), BTC Company and Turkey (to BOTAS). 

Last year the field produced about 9.9 billion standard cubic metres (bcm) of gas and 2.3 million tonnes (about 18.3 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.

Drilling

In 2015 Shah Deniz Stage 1 delivered 2 gas producers – SDA07 in May and SDA08 in December.

The Istiglal rig was transferred to the shipyard for rig certification and upgrade in July 2015.  The Heydar Aliyev rig completed drilling operations on SDD03 and SDD04 in March and October 2015 respectively and started drilling SDG02 lower section in support of the Shah Deniz Stage 2 pre-drill programme. These two rigs have already drilled nine production wells in preparation for the first gas from Shah Deniz Stage 2 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 2015, the Shah Deniz Stage 2 project continued to move ahead with a number of milestones already achieved. The project is over 66% complete in terms of engineering, procurement and construction, and remains on target for first gas from Shah Deniz Stage 2 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. In the fourth quarter, the hull strips of the Subsea Construction Vessel Khankendi completed their journey from Singapore through the Volga-Don canal and arrived safely in Baku to join the bow section, which has now been completed at the 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. Another major milestone was the delivery of the first two subsea Christmas Trees that were delivered to Baku from Leeds, UK, following completion of their UK testing scope.

At the end of 2015, over 20,000 people were involved in construction activities across all main contracts in Azerbaijan and over 80% of them were 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 2015, SCP spent about $47.5 million in operating expenditure and about $1.1 billion in capital expenditure. 

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

In 2015, SCP’s daily average throughput was 18.6 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 2015, SCPX activities continued along the pipeline route across Azerbaijan and Georgia. 

In Azerbaijan, mainline construction continued to ramp up with approximately 71km of pipe welded. Trenching, lowering, laying and backfilling activities commenced at the end of November and are progressing. Stocks of pipe have been building up at the pipe yards along the route with more than 60% of the pipe needed for the Azerbaijan section already stored at Mugan, Kurdamir, Yevlakh, and Qazanchi pipe yards. The first horizontal directional drilling site at Agsu Canal has progressed well. 
In Georgia, main construction works have continued for Compressor Station 1 and have commenced for Compressor Station 2 and Area 81.  Pipe stringing has continued along the right of way with 27km in place and approximately 7km of pipe welded. Preparations for commencement of trenching, lowering and backfilling continued with the start of this activity expected in the first quarter of 2016.

Exploration

With the completion of the Shafag-Asiman 3D seismic dataset interpretation earlier in 2015, work has commenced on planning for the first exploration well. 

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. The 2D seismic survey in the SWAP contract area was safely completed in December 2015. Public consultations for the 3D seismic acquisition programme Environmental and Social Impact Assessment  has already commenced and the programme is at the final planning stage to start in March 2016.

People

At the end of 2015, the number of BP’s Azerbaijani national employees was 2,735. Some 87% of BP’s permanent professionals in Azerbaijan are nationals and many of them are in senior positions including four 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 of the professional roles that are currently occupied by the expatriate employees. 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.

Social Investment

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 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 2015, BP and its co-venturers spent $4.5 million in Azerbaijan alone on social investment projects.

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

Some examples of such projects 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 and its co-venturers’ efforts to increase the local content of their contracts in Azerbaijan and contribute to the healthy and transparent development of the local economy. Since its start the EDTP has aimed to contribute to the broadening of Azerbaijan’s economic base and to enhancing 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 SPM is designed to develop project management capabilities of individuals representing the private and public sectors. To date the SPM has trained 325 national project managers with international certificates.
  • 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 its co-venturers are providing vocational and technical discipline training support, through SOCAR’s Regional Training Centre in Gobustan, for a large group of representatives of the local communities residing in the neighbourhood of the Sangachal Terminal - Sangachal, Umid, Azimkend and Gobustan settlements. In 2015, BP and its co-venturers sponsored the training of 79 technicians at the Centre.
  • BP’s ongoing support for the development of sport through its partnership with Azerbaijan’s National Olympic and Paralympic Committees. This partnership includes supporting a group of national athletes in their preparation for major international sporting events as well as assisting elite athlete development in Azerbaijan. As part of this partnership BP has funded a number of development and capacity building programmes including development of aspiring medal hopes for Azerbaijan and the Baku 2015 Games Academy initiative.
  • 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