Autumn 2001 (9.3)
BP Current Developments
1 of ACG Sanctioned
Left: BP's Sir John Browne met with President
Aliyev during his June 21st visit to Azerbaijan.
30, the Steering Committee for the development of the Azeri,
Chirag and deepwater portion of the Gunashli (ACG) fields sanctioned
the construction stage of Phase 1 of Full Field Development.
This was a long-awaited event and the official signing took place
at the Presidential Palace and was witnessed by President Aliyev.
The Steering Committee includes representatives from the State
Oil Company of Azerbaijan (SOCAR10%) and the project's nine
other sponsors: BP (operator34.1%), Unocal (10.3%), LUKoil
(10.0%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon
(5.6%), Itochu (3.9%) and Delta Hess (2.7%).
The Phase 1 project, a $3.4 billion development, is the first
major step after the Early Oil Project (November 1997) in the
implementation of the ACG Production Sharing Agreement (PSA)
and the first step towards achievement of the ACG Full Field
Development. Approximately $2.74 billion will be spent on construction
of the facilities and pre-drilling to deliver the first oil production
from Phase 1 by the first quarter of 2005. The remaining $.66
billion will be spent on subsequent development drilling. The
project will create more than 3,000 local construction jobs at
Left: Children's book about Road Safety.
and Socio-Economic Overview covering the ACG Full Field Development
was accepted by the Ministry of Ecology and Natural Resources
in June 2001 and is designed to provide initial assurance on
the environmental standards adopted. A detailed Environmental
and Socio-Economic Impact assessment for Phase 1 is being prepared
for approval by January 2002.
Phase 1 targets development of the central area of the Azeri
field. Phase 2 will focus on the development of the remaining
parts of Azeri (West and East), and Phase 3 will develop deepwater
An estimated 193 million tons of Phase 1 reserves are expected
to be produced during the PSA period. The development is expected
to achieve average rates of 18.7 million tons per annum (375,000
barrels per day) of oil at maximum production. To achieve this
production, 48 production, water injection and gas injection
wells will be drilled, followed by 46 sidetracks throughout the
life of the field.
The Baku-Tbilisi-Ceyhan (BTC) Pipeline Project shareholders met
in mid-May to review the results from the project's first phase.
They noted that substantial progress had been made with regard
to both technical and commercial development. On June 10, after
reviewing the project costs and anticipated transportation volumes,
the partners decided to undertake the Detailed Engineering stage
of the project. The Final Reports were received, enabling the
12-month Detailed Engineering Phase to commence on June 20.
Preliminary discussions with international financial institutions
and export credit agencies have indicated that, based on these
costs and volumes, the project will attract sufficient financing.
The Detailed Engineering stage of the BTC project will be completed
in mid-2002 and cost about $150 million. The key results will
be a finalized construction corridor, construction and major
equipment contracts ready for award, confirmation of project
costs and final pipeline design and environmental impact assessments
completed and in the final approval process with the transit
Left: David Woodward, President of AIOC,
presenting Phase 1 of Full Field Development of ACG to President
Discussions with respect to assigning certain portions of SOCAR's
interest to potential new shareholders are ongoing with a number
of companies. A pipeline project company will be formed towards
the end of 2001, incorporating any new participants in the project
in addition to the current participants.
All of the necessary agreements for project implementation and
operation, including owners and transportation agreements, will
be completed during the Detailed Engineering stage. Lenders term
sheets required for external financing are also scheduled to
be in place during this phase.
A 32-month Land Acquisition and Construction phase will follow
Detailed Engineering, with the pipeline ready for testing by
the end of 2004. First volumes from Full Field Development Phase
1 are scheduled to flow in early 2005.
BP President Visit
Sir John Browne, BP Group Chief Executive, visited Turkey, Georgia
and Azerbaijan June 19-22 and paid courtesy visits to the presidents
of these three republics. Sir John met with President Aliyev
on June 21 at the Presidential Palace. During the visit, they
inaugurated the HIVE (Highly Immersive Visualization Environment)
facility in BP's Villa Petrolea Offices in Baku. The HIVE is
a computer-based "virtual reality" tool that helps
BP's multi-disciplinary teams tackle complex field development
problems. The BP HIVE in Azerbaijan is the first of this type
of facility in the Caspian region.
Chirag Future Development (CFD), which was implemented in late
2000, has continued successfully this year. A significant amount
of work has been undertaken on the Chirag platform to allow oil
production rates in excess of 130,000 bpd (6.5 million tons per
annum). This has included upgrading the drilling rig and separator
vessels and increasing the size of the oil booster pumps. Through
the application of Extended Reach Drilling (ERD) technology,
the Chirag Future Development project will increase Chirag recoverable
reserves by 330mmbbls.
Left: BP sponsored an exhibition
for the Azerbaijan Society for the Protection of Animals.
to Azerbaijan's consumers has increased through cooperation with
and the completion by SOCAR of the Oil Rocks Gas Compression
expansion project. This has allowed the operator to reduce flaring
from the Chirag platform significantly. The completion of the
project has enabled AIOC and SOCAR to export up to 2.7 million
cubic meters of gas per day from Chirag to Oil Rocks, and then
to shore, to meet Azerbaijan's growing demands for gas.
To mark the beginning of the school year, BP/AIOC worked with
local communities to build new classrooms and refurbish school
buildings in the Garadagh district of Baku and in a number of
villages of the Gusar, Guba, Siyazan, Khachmaz, Kurdamir, Yevlakh,
Shamkir, Agstafa, Goranboy districts along the Northern and Western
Route Export Pipelines.
"Azerbaijan Media in Transition: Problems and Prospects"
was the theme of a BP-sponsored Media NGO forum held in Nabran
July 13-15 to celebrate Azerbaijan's National Press Day. The
Forum brought together media executives and media-related NGOs
to discuss the problems of transitioning to Azerbaijan's new
Latin script. Other topics included challenges related to educating
young journalists, media legislation, the role of media NGOs
in the free press building processes and the language of the
press. The Committee for the Protection of Journalists organized
AIOC held a Lada Challenge competition in mid-July in Sangachal
to attract technicians with hands-on experience to fix deliberate
faults in Lada cars that the company provided. The Challenge
was designed to celebrate local expertise and skills in car maintenance.
On June 1, International Children's Day, BP held a colorful event
at one of its three Traffic Parks designed to raise children's
awareness of traffic rules and safe behaviors in the street.
To date, the program has reached more than 20,000 children aged
5-9. The company has also produced a series of brochures, leaflets,
posters and billboards to teach children about road safety.
Azerbaijan's junior chess team received first place at the Third
International BP Junior Chess Cup Tournament held in Baku June
18-23. Young chess players from Azerbaijan, Russia, Georgia and
Iran participated in this event organized with the Ministry of
Youth, Sports and Tourism, Azerbaijan's Chess Federation and
the Republican Chess Center.
(9.3) Autumn 2001.
© Azerbaijan International 2001. All rights reserved.
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