First quarter 2018 results

17 May 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 the first quarter of 2018, we spent about $102 million in operating expenditure and $260 million in capital expenditure on ACG activities.

Production

In the first quarter of 2018, ACG continued to safely and reliably deliver stable production. Total ACG production for the quarter was on average 597,000 barrels per day (b/d) (about 54 million barrels or 7 million tonnes in total) from the Chirag (53,000 b/d), Central Azeri (156,000 b/d), West Azeri (123,000 b/d), East Azeri (94,000 b/d), Deepwater Gunashli (109,000 b/d) and West Chirag (62,000 b/d) platforms.

At the end of the quarter, 118 oil wells were producing, while 52 wells were used for gas and water injection.

Drilling and completion

ACG completed 5 oil producer wells in the first quarter of 2018

Associated gas

In the first quarter, ACG delivered an average of about 5.8 million cubic metres per day of ACG associated gas to SOCAR (525 million 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 the first quarter of 2018, 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 the first quarter, the Sangachal terminal exported more than 71 million barrels of oil and condensate, including third party volumes. Of this, more than 63 million barrels were exported through Baku-Tbilisi-Ceyhan (BTC), about 8 million barrels through the Western Route Export Pipeline (WREP), and about 0.4 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 30 million standard cubic metres (about 1.1 billion standard cubic feet) of Shah Deniz gas was exported from the Terminal daily during the first quarter of 2018.

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), ExxonMobil (2.50 per cent) and ONGC (BTC) Limited (2.36 per cent).

In the first quarter of 2018, BTC spent approximately $30 million in operating expenditure and about $5 million in capital expenditure.

Since the 1,768km BTC pipeline became operational in June 2006 till the end of the first quarter of 2018, it carried a total of about 2.93 billion barrels (around 391 million tonnes) of crude oil loaded on 3,839 tankers and sent to world markets.

In the first quarter of 2018, BTC exported around 63 million barrels (about 8.3 million tonnes) of crude oil loaded on 81 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, Russia and Kazakhstan.

Shah Deniz

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 the first quarter of 2018, Shah Deniz spent approximately $123 million in operating expenditure and about $415 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.

Production

In the first quarter of 2018, 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 quarter, the field produced about 2.7 billion standard cubic metres (bcm) of gas and 0.6 million tonnes (about 5 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.

Drilling

During the first quarter of 2018, Shah Deniz Alpha platform continued drilling the SDA11 well.

The Istiglal drilling rig completed the SDD03 well and commenced SDD04 well completion.  The Maersk Explorer rig has continued drilling the lower section of the SDH01 well.

The above two rigs 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 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

After achieving significant construction and commissioning milestones across the whole gas value chain in 2017, the Shah Deniz 2 and South Caucasus Pipeline Expansion (SCPX) projects have now entered the start-up phase in the run up to achieving first gas in 2018. 
 
Shah Deniz 2 first gas scope is now 99 percent complete, in terms of engineering, procurement, construction and commissioning.

During the first quarter of 2018, hook-up and commissioning activities continued on the Shah Deniz Bravo platform with strong progress on both topsides. Overall progress is slightly ahead of schedule at over 90% complete. The facility is under operations control and start up procedures are progressing well with final checks under way ahead of introduction of hydrocarbons from the terminal.

The Shah Deniz 2 onshore facilities are now integrated with the operating Sangachal terminal following the removal of the fence that previously segregated them. Hydrocarbons have been introduced into the plant, a significant milestone that is essential for both first commercial deliveries and the subsequent start of production from the Shah Deniz Bravo facilities later this year.

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 the first quarter of 2018, SCP spent about $8 million in operating expenditure and about $165 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 23.1 million cubic metres of gas per day during the quarter.

The SCP has a dual operatorship with BP as the technical operator being responsible for construction and operation of the SCP facilities and SOCAR Midstream Operations, as commercial operator, responsible for SCP commercial operations.

SCP Expansion (SCPX) Project

During the first quarter of 2018, SCPX activities continued successfully along the pipeline route across Azerbaijan and Georgia. Overall, 99 percent of the first gas scope is already complete.

All mainline production welds are now completed across SCPX, with only tie-in welds remaining to complete the pipeline. Compressor Station 1 in Georgia has already been declared ready to operate. All infrastructure required to support first commercial gas deliveries to Turkey have now been completed. At Compressor Station 2, commissioning has commenced and the activities are on schedule.

Exploration

At the end of 2017 the processing and interpretation of the 3D data acquired 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. Planning for the exploration wells drilling in the selected prospective areas is ongoing.

We also continue to plan for the first exploration well on the Shafag-Asiman block.

People

At the end of the first quarter of 2018, the number of BP’s Azerbaijani national employees was 2,688 including fixed-term employees. This makes 89 percent of BP’s professional employees in Azerbaijan, with many of them in senior positions.

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.

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 2018, BP and the co-venturers in BP-operated joint ventures spent over $1 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 modules for four new agricultural occupations (crop production, agriculture machinery, fruit growing, vegetable specialist) 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 had five graduations, training and internationally certifying 357 national project managers.  The project has been implemented in phases. One of the objectives set at the start of the project was to hand over the delivery of the training programme to national instructors. The SPM achieved this goal during Phase 4 with the full transition of the training programme to the local staff.  The entire training staff of the SPM are now nationals and the project has been handed over to a local organisation for sustainable management.   
  • BP (on behalf of the co-venturers in the joint ventures that BP operates in Azerbaijan) are supporting secondary schools in enhancing IT skills training. As part of this 3-year initiative a new curriculum for IT specialised secondary schools will be developed in cooperation with the Ministry of Education. In addition, 50 teachers representing 25 Baku schools will be trained to pilot and effectively use the new curriculum.
  • 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 a project to build early intervention 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 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) are supporting two livelihood generation projects covering 200 community members from the Ujar, Yevlakh, Samukh and Shamkir districts by providing equipment, training and continuous consultancy in beekeeping and small farming. In December 2017, it was decided 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 (BHOS) 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 BHOS, sharing their knowledge and experience and providing information about BP’s activities, technology, operations processes and mechanisms. In addition, BP is funding an innovative educational project at BHOS - the “Business education for engineers”, to help national engineers smoothly step from university to business career. The programme is designed for the 5th year undergraduate students and aims to provide extensive knowledge in management and business.
  • 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 and capacity building 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.

Presentation slides

Further information: Tamam Bayatly at BP’s Press Office in Baku. 
Telephone: (+994 12) 599 45 57