14.4 BP Developments: East Azeri Ahead of Schedule

Winter 2006 (14.4)
Pages 74-78

BP Developments
East Azeri Ahead of Shedule
by Tamam Bayatli
Communications Manager

Left: East Azeri platform in the Caspian has started production four months ahead of schedule. It currently produces more than 90,000 barrels per day from three of the eight pre-drilled wells. Photo: BP

With the start-up of oil production from the East Azeri (EA) platform four months ahead of schedule in October, BP completed Phase 2 of the Azeri-Chirag-Gunashli (ACG) field development in the Azerbaijan sector of the Caspian Sea. Phase 3, which will develop the Deep Water Gunashli area of ACG, remains on schedule to commence production in 2008.

This major achievement represented the hard work and dedication of more than ten thousand people in Azerbaijan and other countries, who have delivered outstanding performance on the East Azeri project over the past three years.

Today East Azeri produces more than 90,000 barrels per day from three of the eight pre-drilled wells. BP expects production to increase through 2007 as the other pre-drilled wells are brought online, prior to platform drilling which will begin this year.

On plateau, the EA facility will produce 260,000 barrels per day, bringing total Azeri production, including West and Central Azeri, to more than 800,000 barrels per day. Oil from EA is transported via the new 30-inch subsea pipeline to the onshore Sangachal Terminal.

Associated gas flows via in-field subsea pipelines to the Compression and Water Injection Platform (C&WP) for re-injection into the reservoir for pressure maintenance. Surplus gas is exported via an existing subsea pipeline to the Sangachal Terminal and onward to the Azerigas system for domestic use.

BTC Lifts 100th Cargo
On February 6, the Baku-Tbilisi-Ceyhan (BTC) Pipeline, which is operated by BP, celebrated the 100th cargo lifting at the Ceyhan Terminal in Turkey. The 100th tanker - the Knock Sheen - took on board in excess of one million barrels of oil - a quantity that took 26 hours to load.

BTC has also achieved several other important milestones lately. On February 5, 2007, it exported more than 600,000 barrels - the highest daily flow-rate to date. Recently, the Ceyhan Terminal saw the berthing of the first 2-million barrel tanker. This type of vessel is expected to become a more regular feature as the throughput of the BTC system grows.

"These exceptional milestones achieved by the pipeline team over are proof that BTC is steadily moving towards what it is meant to be - 'a one-million barrel a day export pipeline' from the Caspian to world markets. I would like to extend my congratulations and thanks to everyone whose efforts have been key to making these successes happen," says Rashid Javanshir, Director of BTC and BP's Vice-President of Onshore Operations.

Left: On February 6, 2007, BTC pipeline celebrated the 100th cargo lifting at the Ceyhan Terminal in Turkey. The Knock Sheen carried more than one million barrels of oil, a quantity that took 26 hours to load. Photo: BP

BTC's throughput has steadily increased as its facilities and pump stations have been brought on stream since the completion of linefill in late May 2006.

Since the first tanker lifting at Ceyhan in June 2006, more than 73 million barrels (9.8 million tons) of crude oil has been exported via BTC.

Current export via the pipeline is running ahead of expectations, and it remains on target to achieve one million barrels per day (approximately 50 million tons per year) in late 2008.

While the pipeline initially carried only Azeri-Chirag-Gunashli (ACG) oil, the first delivery of Shah Deniz condensate into the line was made in January 2007. It is expected that future volumes will include those from the other side of the Caspian, possibly commencing by the end 2007.

BTC is a world-class project, which is expected to make a positive difference by bringing significant benefits to the region. By avoiding the Turkish Straits, the pipeline will help relieve the inevitable growth in oil-related traffic and associated environmental risks, while creating substantial revenues for the transit countries. It will also help strengthen economic and political links between Azerbaijan, Georgia, Turkey and the West.

Caspian Energy Centre
In September, BP on behalf of its partners re-launched the Caspian Energy Centre (CEC) at the Sangachal Terminal. The re-launch followed the completion of an extensive refurbishment and upgrade program, which was undertaken in collaboration with the Houston Museum of Natural Sciences.

Left: Exhibits at the Caspian Energy Centre, the first exhibition facility in Azerbaijan fully dedicated to the energy industry and the specific sciences, which underpin the creation, exploration and commercial use of hydrocarbons. Photo: BP

CEC is the first exhibition facility in Azerbaijan fully dedicated to the energy industry and the specific sciences, which underpin the creation, exploration and commercial use of hydrocarbons.

The facility is now equipped with a significant new series of exhibits, which turn it into a world-class innovative science center.

The Centre is designed as an educational tool, primarily for use by secondary schools to help educate children in Azerbaijan about the natural resources of this country and their uses in everyday life.

"We believe specially tailored educational programs and activities, interactive games and workshops organized by our Centre will help enhance the basic knowledge of future generations in Azerbaijan", says Ismayil Miriyev, CEC's Manager. Ismayil is the first Azerbaijani to successfully complete an internship in the Smithsonian Institute in Washington, DC.

"Learning through interactive games and other educational activities is a universally recognized method of bringing science to life, particularly for children. I'm really happy to be involved in such an innovative and far-reaching initiative, which brings to life the concept of an energy-related science centre in Azerbaijan," says Ismayil.

In addition, CEC will continue to accommodate visits of senior government and state officials, representatives of partners to the Azeri-Chirag-Gunashli (ACG), Baku-Tbilisi-Ceyhan (BTC), Shah Deniz and South Caucasus Pipeline projects, local communities, university students and the general public to update them on the projects' progress and achievements. It will also serve to inform the public of the projects' potential impact on economic and social development of this country. Since its first opening in May 2005, CEC has already hosted more than 6,000 visitors, of whom 4,000 were schoolchildren from local communities in the Garadagh district and the city of Baku.
Visit: CEC.az.

New Enterprise Centre Opens
In October, BP on behalf of its partners in the Azeri-Chirag-Gunashli (ACG), Baku-Tbilisi-Ceyhan (BTC), Shah Deniz and South Caucasus Pipeline (SCP) projects re-launched the Enterprise Centre in Baku following its refurbishment and upgrade.

The Enterprise Centre is the focal point for BP's and its partners' efforts to maximize local content of their business in Azerbaijan. This will happen through increasing both the number of companies participating in their contracts, and the value of contracts awarded locally.

Left: Bill Schrader (right), President BP Azerbaijan and Raymond Conway of European Bank for Reconstruction and Development (EBRD) at the ceremony of contribution agreement to jointly support private sector development in Azerbaijan. Photo: BP

To achieve this objective, the new Enterprise Centre will work closely with the country's leading companies, foreign investors and contractors, trade associations and other groups to support local enterprises and encourage their participation in BP contracts.

The Enterprise Centre was first established by BP and its partners in May 2002 in support of local small and medium-sized enterprise (SME) development.

Gulya Novruzova is the current Manager of the Enterprise Centre. In its new role, the Enterprise Centre will lead all initiatives aimed at meeting the ambitious target set by BP to double the value of contracts placed with Azerbaijan-owned companies within five years.

To reach this target, BP and its partners will implement plans to provide transparent sources of capital for local companies with potential to access the supply chain and a substantial enterprise development program to help local companies gain further skills and knowledge. All these plans are also designed to encourage the non-oil sector and support enterprise development throughout Azerbaijan.

Since the establishment of this facility, BP and its partners have made a substantial contribution to the proactive development of Azerbaijan's economy, enhancing the country's long-term economic stability. BP places a higher priority than ever before on SMEs, with the local enterprise development playing a central role. In 2006 BP spent about $1.5bn, in- country, with over 440 SMEs, over 60 state-owner companies, and more than 30 joint ventures that include Azerbaijani partners.

Major Contracts Awarded
A major air-diving and Remote Operational Vehicle (ROV) services contract has been awarded to the local private company Dalgij by BP as operator of the Azeri-Chirag-Gunashli oil and Shah Deniz gas development projects.

This $1 million award is the local company's second contract with BP. Dalgij builds on the company's competencies and continual hard work to comply with BP's safety and performance expectations. In addition to these direct contracts, Dalgij has been involved in BP operations and project activities through various other diving contractors in the Caspian.

In March 2004, Dalgij became a member of the International Marine Contractors Association Diving & ROV Division (IMCA International) and had eight local assistant "air" scuba diving supervisors certified by IMCA in compliance with BP requirements.

In addition, Dalgij has been accredited by the American Bureau of Shipping and the Russian Maritime Register of Shipping for underwater ship inspection and repairs. This process required both a huge effort from all of the Dalgij management and personnel, and a considerable financial commitment to ensure that they met international standards.

The company has successfully incorporated BP's rules for safety and quality assurance for diving operations into their own policies. In addition, its offshore workforce has been involved in BP's trainings at the Sangachal Terminal, offshore survival and Helicopter Awareness (HUET) certification.

Dalgij is the winner of BP's and its partners' Best of Business award as the Company of the Year. In addition, in December BP extended its engineering and design services contract with another local company - Encotec. This new agreement provides extension of the existing contract with Encotec until March 2008 with a value increase up to $1million.

Above: Clare Bebbington (right), BP Director of Communications and External Affairs, believes that BP is directly investing in the country's future by supporting the development of young Azerbaijanis' skills and careers. (Left) Andy Williams, Director of British Council. Photo: BP

Under the extended contract, Encotec will manage small engineering and modification projects in support of the Azeri-Chirag-Gunashli (ACG), Shah Deniz, Baku-Tbilisi-Ceyhan (BTC) and South Caucasus Pipeline (SCP) facilities. Services provided by Encotec may include site survey and inspection, preparation of detailed technical specifications and method statements for materials and installation work, as well as preparation of detailed resource and work execution plans, provision of documentation, design engineering, drawings, layout, and final installation and commissioning report.

Encotec was founded in 2000 and today it is a well-managed multi-discipline engineering company. Among other achievements, Encotec has received ISO 9001:2000 certification by DNV (Den Norske Veritas) for engineering, design and project management services for the oil and gas sector, as well as other industrial and construction sectors.

Fifth Biodiversity Competition
In December, BP, on behalf of its partners announced the Fifth Biodiversity Competition award in Azerbaijan. This competition is part of BP's and its partners' Biodiversity Strategy and supports their commitment to undertaking a series of specific biodiversity initiatives in the countries and areas where we operate.

Left: Sujaddin Guliyev (left) on behalf of the Society of Zoologists of Azerbaijan, accepting First Prize at the Fifth Biodeiversity Competition for their project "Laying the Foundation for the Monitoring of Bezoar Goat (Capra Aegagrus) and Moufflon (Ovis Orientalis) in Azerbaijan and the Development of Action Plan to Preserve These Species." Gunther Newcombe, HSE Manager for BP Azerbaijan, presented the award which is valued at more than $15,000. Photo: BP

The competition was held in two categories - the best biodiversity project and the best biodiversity article and video material.

This second category was introduced to promote Environmental Journalism. The competition was announced in June 2006.

Some 80 applications were submitted - 61 projects from 46 organisations, and 21 articles from 10 eco-journalists.

As a result of the multi-stage evaluation process, the main prize was awarded to the Society of Zoologists of Azerbaijan for the project "Laying the Foundation for the Monitoring of the Bezoar Goat (Capra Aegagrus) and Moufflon (Ovis Orientalis) and the Development of an Action Plan to Preserve These Species." The value of the project is $18,670.

The second prize ($1,500) went to the non-governmental organization Ecostyle-Azerbaijan for their project "Champion Trees of Azerbaijan." The third prize ($1,000) went to the Society of Zoologists of Azerbaijan for their proposal entitled "The Animal World in the Azerbaijan Sector of the Caspian Sea." In addition, four participants were highly commended by the judging panel with an award of $500 each.

In the category for best Biodiversity Article and Video Material, no First Prize was awarded this year as none of the submissions fully met all of the requirements of the competition. The Second Prize ($500) was awarded to Gulgiz Suleymanova for her article "Seal Flu Virus" published in the Zerkalo newspaper.

The Third Prize ($300) was awarded to Sevinj Heydarova for her series of articles: "Threat of Fire", "Threat of Pesticides" and "The Golden Sands of Absheron are Being Removed under the Cover of Night" published in the Kaspiy and the Obozrevatel newspapers.

New Investment
BP has launched a major new scholarship program for Azerbaijan. This scholarship initiative aims to provide outstanding Azerbaijani graduates with the opportunity to pursue courses of studies in the UK. It will enable at least 10 young scholars to get their Master's degrees by attending university classes starting in Autumn 2007. The program will cover a variety of discipline areas including public administration, banking, finance and accounting, and economics.

"We will continue to make education and training a particular focus. We plan to continue to invest resources in such initiatives since our experience suggests this is where we can make the most effective and sustainable contribution. We believe that through support for young Azerbaijanis' skills and career development, we are directly investing in the country's future," says Clare Bebbington, BP's Director of Communications and External Affairs.

"We also believe that this program will enable young bright citizens of Azerbaijan to become uniquely positioned to contribute to their country's economic and social development and help their nation build its prosperous future. We hope that upon return to Azerbaijan from Western universities these talented young people will be among those who are driving the positive changes in this country." The program is administered by the British Council on behalf of BP.

Emergency Medical Service
In January BP and its partners in the Azeri-Chirag-Guneshli (ACG), Baku-Tbilisi-Ceyhan (BTC) and South Caucasus Pipeline (SCP) projects inaugurated a new emergency medical service facility in Kurdamir. The facility will be operated as part of the Kurdamir Central Hospital using mixed resources of BP's medical service provider and specially trained local medical personnel.

The project is part of a major initiative called Regional Emergency Medical Programme (REMP), which is designed to improve pre-hospital and in-hospital emergency medical services in the areas close to BP operated pipelines. These are the areas, which did not previously have emergency medical service bases to international standards. The REMP covers three major districts of Azerbaijan along the BTC/SCP and Western Route Export pipelines - Kurdamir, Yevlakh and Shamkir.

Left: Opening Ceremony of the Modern Emergency Medical Service for the Kurdamir region, a project sponsored by BP and its partners in the Azeri-Chirag-Guneshli (ACG), Baku-Tbilisi-Ceyhan (BTC) and South Caucasus Pipeline (SCP). Photo: BP

A similar facility was launched late 2006 in Yevlakh while the one in Shamkir will be operational in the near future.

The new facilities are designed to provide medical service to local communities, not only BP-operated projects staff.

The work undertaken by the REMP includes renovation of existing emergency departments of central hospitals in the three districts, provision of new medical equipment and extensive training for local medical personnel.

International Medical Corps (IMC) is the implementer of the REMP on behalf of ACG, BTC and SCP partners.

The total cost of the REMP is $600,000 of which $450,000 is invested by ACG, BTC and SCP partners. The remaining $150,000 comes from the implementing partner IMC. In addition to this total cost, BP and its partners will spend more than $300,000 (more than $100,000 a year for three consecutive years) to cover operational expenses for running the three facilities.

The REMP is implemented in collaboration with a wider and bigger regional initiative called the Emergency Medical Development Initiative (EMDI) funded by USAID, Hess, Chevron and the BTC and SCP projects and implemented by IMC. This enables the REMP to be more comprehensive and cost effective, as well as to cover wider communities than those directly affected by BP-operated projects.

"BP and our partners are proud to sponsor this important health initiative. It will clearly bring benefit to the staff involved in our onshore oil and gas operations through a faster delivery of medical aid in the event of any emergency. But most importantly these new and modern facilities will provide local communities along our pipelines reliable access to high quality emergency medical care. With their sophisticated medical equipment and ambulances, these new hospital facilities will provide emergency care from now on to those who will need it," says Rashid Javanshir, BP's Vice-President, Onshore Operations.

New water purification facilities were opened in the Sigirli and Karrar villages of the Kurdamir district by BP on behalf of its partners in the Baku-Tbilisi-Ceyhan (BTC) and South Caucasus Pipeline (SCP) projects.

The project is part of a larger initiative called the Improvement of Provision of Potable Water (IPPW) which was launched in 2005 and covers those communities which are most affected by the lack of potable water.

So far the IPPW Project ($190,000) has provided six communities with water purification facilities using locally available technologies. The IPPW has also created management structures for each facility in the form of community-municipality owned limited liability companies to manage water quality and revenues effectively and transparently. It will provide access to potable water for more than 6,000 people. These are communities of Sigyrly, Karrar Kend, and Karrar Gesebe of Kurdamir District; Bergushad and Gulaband of Ujar District; and Orta Laki of Aghdash District.

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