16 February 2018
Azeri-Chirag-Deepwater Gunashli (ACG)
ACG participating interests are: BP (30.37 per cent), SOCAR (25.0 per cent), Chevron (9.57 per cent), INPEX (9.31 per cent), Statoil (7.27 per cent), ExxonMobil (6.79 per cent), TPAO (5.73 per cent), ITOCHU (3.65 per cent), ONGC Videsh Limited (OVL) (2.31 per cent).
BP Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.
In 2017, we spent more than $456 million in operating expenditure and about $1.176 billion in capital expenditure on ACG activities.
On 14 September 2017 the Azerbaijan Government and SOCAR, together with the international co-venturers signed the amended and restated ACG PSA. The contract was ratified by the Parliament (Milli Majlis) of the Republic of Azerbaijan on 31 October.
In 2017, ACG continued to safely and reliably deliver stable production. Total ACG production for the year was on average 588,000 barrels per day (b/d) (about 215 million barrels or 29 million tonnes in total) from the Chirag (51,000 b/d), Central Azeri (137,000 b/d), West Azeri (124,000 b/d), East Azeri (82,000 b/d), Deepwater Gunashli (117,000 b/d) and West Chirag (77,000 b/d) platforms.
At the end of the year, 115 oil wells were producing, while 54 wells were used for gas and water injection.
Drilling and completion
ACG completed 17 oil producer and 3 water injector wells in 2017.
In 2017, ACG delivered an average of about 7.9 million cubic metres per day of ACG associated gas to SOCAR (2.9 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
In 2017, 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 30 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 50 million standard cubic metres per day. During 2017, the Sangachal terminal exported more than 283 million barrels of oil, including third party volumes. Of this, more than 253 million barrels were exported through Baku-Tbilisi-Ceyhan (BTC), 28 million barrels through the Western Route Export Pipeline (WREP), and more than 2 million barrels via a separate condensate export line. Gas is exported via the South Caucasus Pipeline (SCP) and via SOCAR gas pipelines connecting the Terminal’s gas processing facilities with Azerigas’s national grid system. On average, about 27.5 million standard cubic metres (about 972 million standard cubic feet) of Shah Deniz gas was exported from the Terminal daily during 2017.
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), ExxonMobil (2.50 per cent) and ONGC (BTC) Limited (2.36 per cent).
In 2017, BTC spent approximately $133 million in operating expenditure and about $29 million in capital expenditure. Since the 1,768km BTC pipeline became operational in June 2006 till the end 2017 it carried a total of about 2.87 billion barrels (about 383 million tonnes) of crude oil loaded on 3,758 tankers and sent to world markets. During 2017, BTC exported around 256 million barrels (about 34 million tonnes) of crude oil loaded on 333 tankers at Ceyhan. The BTC pipeline currently carries mainly ACG crude oil and Shah Deniz condensate from Azerbaijan. In addition, other volumes of crude oil and condensate continue to be transported via BTC, including volumes from Turkmenistan and Kazakhstan.
Shah Deniz participating interests are: BP (operator – 28.8 per cent), TPAO (19 per cent), AzSD (10.0 per cent), SGC Upstream (6.7 per cent), PETRONAS (15.5 per cent), LUKOIL (10 per cent) and NICO (10 per cent).
In 2017, Shah Deniz spent approximately $451 million in operating expenditure and about $2.88 billion in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.
In 2017, the Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC), Turkey (to BOTAS) and to BTC Company in multiple locations.
During the year, the field produced about 10.2 billion standard cubic metres (bcm) of gas and 2.4 million tonnes (about 19 million barrels) of condensate.
The existing Shah Deniz facilities’ production capacity is currently 30.0 million standard cubic metres of gas per day or around 10.9bcma.
In 2017, the Shah Deniz Alpha platform completed the SDA10 well and brought it on production. The drilling operations on the SDA11 well were resumed and are currently ongoing.
On Shah Deniz 2, to date the Istiglal drilling rig and the Maersk Explorer have already drilled 14 wells and completed four wells on the North Flank and three wells on the West Flank in preparation for commencement of Shah Deniz Stage 2 production and subsequent ramp up. Drilling operations will continue to deliver all wells required to ramp up to plateau level.
Shah Deniz Stage 2 Project
2017 was a great year for the Shah Deniz 2 and South Caucasus Pipeline Expansion (SCPX) projects. Both projects achieved significant construction, commissioning and handover milestones across the gas value chain, safely executing over 45 million man-hours of work in the process. The projects are now entering the start-up phase in the run up to achieving first gas in 2018. Shah Deniz 2 first gas scope is now 99 per cent complete, in terms of engineering, procurement, construction and commissioning. On 6 September, a new flagship vessel for the Caspian – Khankendi was launched. The state-of-the-art subsea construction vessel has been specifically designed and built to install the biggest subsea production system in the Caspian Sea as part of the Shah Deniz 2 project. The official inauguration of the new $378 million vessel took place in Baku in an event which was attended by H.E. President Ilham Aliyev. The Khankendi is now deployed to the Shah Deniz field performing subsea installation and construction work. During 2017, the construction of both Shah Deniz 2 platform topside units was completed. They safely sailed away and were installed offshore with commissioning work currently ongoing. Construction works at the Sangachal terminal expansion area are also complete. The commissioning of the new Shah Deniz 2 facilities is currently ongoing with the plans to start operations this year to be able to receive and process the additional gas volumes from Shah Deniz 2. The installation of North Flank production umbilicals has already been completed by the Khankendi. Following completion of the export lines to the Sangachal terminal, the wells, subsea infrastructure, the Shah Deniz 2 (Bravo) platform and the Sangachal terminal are now interconnected for the first time. At the peak of project activities, over 24,000 people were involved in construction works 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), TPAO (19 per cent), AzSCP (10.0 per cent), SGC Midstream (6.7 per cent), PETRONAS (15.5 per cent), LUKOIL (10 per cent) and NICO (10 per cent).
In 2017, SCP spent more than $29 million in operating expenditure and about $784 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 20.5 million cubic metres of gas per day during 2017. 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 commercial operations.
SCP Expansion (SCPX) Project
During 2017, SCPX activities continued successfully along the pipeline route across Azerbaijan and Georgia. Overall, 99 percent of the first gas scope is already complete. Mainline construction has been completed in Azerbaijan and Georgia. On the Azerbaijan section of the pipeline, the focus is on back-end activities including tie-in sections and hydro-testing. Within Georgia, hydrocarbons have been safely introduced into the metering station (Area 81) on the Georgian-Turkish border, the Georgia pipeline loop and Compressor Station 1 (CSG1). Area 81 is now fully operational and is the first asset within the Southern Gas Corridor to be declared ready to operate. Focus is now on completing safe start-up of CSG1 in preparation for operation and completion of the construction and commissioning activities on the second Compressor Station (CSG2) in Georgia.
In the fourth quarter of 2017 the processing and interpretation of the 3D data acquired in 2016 from the Shallow Water Absheron Peninsula (SWAP) contract area was finalized. A Notice of Prospectivity was signed with SOCAR, signifying BP’s commitment to drill exploration wells in three prospective areas in shallow water Absheron. We also continue to plan for the first exploration well on the Shafag-Asiman block.
At the end of 2017, the number of BP’s Azerbaijani national employees was 2,448 including fixed-term employees. This makes 89 percent of BP’s professional employees in Azerbaijan. Many of them are in senior positions, including six members of the regional leadership team. In addition, there are 265 national employees working for the projects. BP remains committed to achieving a nationalization target of 90 percent 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 percent nationalized. The nationalization agenda also includes further optimization of BP’s learning and development programmes, close participation in public and private sector initiatives to further improve the local talent market.
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. In 2017, BP and the co-venturers in BP-operated joint ventures spent about $5.7 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:
- BP and its coventurers recently launched the “Enhancing employability skills for people with disabilities” programme aimed at enhancing employment opportunities for people with disabilities in Azerbaijan. This will be achieved by developing skills and capabilities of the 100 selected people through trainings and other specialised activities.
- A new partnership with the Ministry of Education which BP (on behalf of the co-venturers in the joint ventures that it operates) launched in September 2016 to support the enhancement of the agricultural vocational education in Azerbaijan. Under this partnership, BP and its co-venturers have committed to upgrading agricultural vocational education framework in Azerbaijan. The project is expected to result in the development of 19 new agricultural occupations and trades thus contributing to the country’s plans to raise the efficiency of the agricultural sector. The project also includes development of textbooks and teaching materials in all of the newly-created occupations.
- 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. BP and its co-venturers announced their decision in November 2016 to extend this programme, which was launched in June 2007, for two more years.
- The School of Project Management (SPM) established by BP (on behalf of the co-venturers in the joint ventures that it operates) 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 and internationally certified 377 national project managers including 52 participants who joined the programme in 2017. The programme has already entered its sustainability phase by handing over the entire training process to local instructors. This was one of the main objectives of the SPM initiative.
- BP and co-venturers recently launched the first Big Data, Data Sciences Instruction and Research Centre in Azerbaijan. The Centre will operate at Baku’s ADA University with the view that it will have a wider impact - it will be open to public institutions and private sector representatives providing them access to its resources. It is also planned to commence a new Master’s Degree programme in Big Data Analytics and Data Sciences to help meet the country’s needs for data scientists and big data analysts.
- BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) are supporting neighbouring communities in developing IT skills. As part of this initiative 50 people from the Sangachal and Umid residential areas near Baku completed CISCO certified IT skills and capacities training, expanding their employment opportunities. In 2016 the programme was expanded to a group of new communities including those along the BP-operated pipeline routes. Some 200 members of the local communities benefited from Phase 2 of the project successfully completing IT Essentials trainings and receiving certificates.
- BP (on behalf of the co-venturers in the South Caucasus Pipeline Company) launched a pilot project in 2016 for capacity-building in the communities along the pipeline route in Goranboy, Samukh, Shamkir, Tovuz and Agstafa districts. The project was designed to enhance the quality of English language teaching in the communities. Building on the success of the pilot phase, the project has been extended to cover up to 165 teachers and 480 community members from 11 rural districts along the pipeline route.
- BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) have partnered with the International Organization for Migration (IOM) to support the transition of international best practices in facilitating efficient implementation of migration strategies, policies and legislation through capacity-building and technical assistance. The beneficiaries of the project are the state agencies dealing with the visa matters. As part of the project the first e-service and Consular Reference Manual for the Ministry of Foreign Affairs was developed and launched. In addition, capacity-building trainings have been conducted for a large group of Consular officers.
- BP (on behalf of the co-venturers in the South Caucasus Pipeline Company) is implementing project to build early intervention services in 14 districts along the pipeline route and beyond - Hajigabul, Kurdamir, Agdash, Ujar, Yevlakh, Samukh, Goranboy, Shamkir, Tovuz, Agstafa, Agsu, Absheron, Gobustan and Shirvan. The aim of the project is to raise both community and health sector awareness of the importance of early intervention in the process of children’s development through the establishment of Early Intervention Centres at the target districts.
- BP (on behalf of the co-venturers in the South Caucasus Pipeline Company) recently launched two new livelihood generation projects supporting 200 community members from the Ujar, Yevlakh, Samukh and Shamkir districts by providing equipment, training and continuous consultancy in beekeeping and small farming. There are plans to expand the beekeeping project called “Sweet Gold” to cover additional 600 community members in other districts along the BP-operated pipelines.
- BP’s business lectures at Baku Higher Oil School by BP experts and senior executives are designed to support national petroleum engineers’ development in Azerbaijan. As part of this initiative, BP senior managers and members of the leadership team regularly give lectures and presentations at this University, sharing their knowledge and experience and providing information about BP’s activities,
For further information please contact: Tamam Bayatly, BP Baku Press office, telephone: 994 (0) 12 599 4557