By Leman Mammadova
BP, the operator of many projects in the energy sector of Azerbaijan, has recently published the 2019 first quarter results of its oil and gas production in the country.
The report says that the Baku-Tbilisi-Ceyhan (BTC) oil pipeline exported about 61 million barrels (over 8 million tons) of crude oil loaded on 74 tankers at the port of Ceyhan in January-March 2019.
Since the BTC pipeline became operational in June 2006, it carried a total of about 3.2 billion barrels (around 425 million tons) of crude oil loaded on 4,159 tankers and sent it to world markets.
BTC spent around $25 million in operating expenditure and approximately $6 million in capital expenditure in the first quarter of 2019, according to the BP report.
At present, the BTC pipeline mainly transports the Azeri-Chirag-Gunashli (ACG) oil and Shah Deniz condensate from Azerbaijan. In addition, other crude oil and condensate volumes, including Turkmen, Russian and Kazakh oil are transported via the pipeline.
The BTC shareholders are: BP (30.1 percent); AzBTC (25 percent); Chevron (8.9 percent); Equinor (8.71 percent); TPAO (6.53 percent); Eni (5 percent); Total (5.00 percent), ITOCHU (3.4 percent); INPEX (2.5 percent), ExxonMobil (2.5 percent) and ONGC (BTC) Limited (2.36 percent).
BP also noted that Azeri–Chirag–Gunashli (ACG) block of oil and gas fields continued to safely and reliably deliver stable production during the first quarter of the year.
According to the report, total production at ACG block for the first three months of 2019 was on average 571,000 barrels per day (about 52 million barrels or 7 million tons in total) from the Chirag (43,000), Central Azeri (146,000), West Azeri (128,000), East Azeri (100,000), Deepwater Gunashli (96,000) and West Chirag (58,000) platforms.
In the first three months of 2019, ACG delivered an average of about 5.2 million cubic metres per day of associated gas to SOCAR (0.5 billion cubic meters in total), primarily at the Sangachal Terminal but also to SOCAR’s Oil Rocks facility.
In April, the next stage of development of the ACG field - Azeri Central East (ACE) project - has been sanctioned. The $6 billion development includes a new offshore platform and facilities designed to process up to 100,000 barrels of oil per day. The project is expected to achieve first production in 2023 and produce up to 300 million barrels over its lifetime.
BP spent approximately $138 million in operating expenditure and more than $279 million in capital expenditure on ACG activities in January-March.
ACG is the largest oil and gas field in the Caspian Sea, covering more than 432 square kilometers. Proven oil reserves of ACG block are estimated at 1.2 billion tons, while gas reserves make 350 billion cubic meters.
A contract for the development of ACG block of fields was signed in 1994 for 30 years. Oil extraction from the field began in November 1997. The new agreement signed in 2017 provides for the development of the field until 2050.
ACG participating interests are as follows: BP (30.37 percent), SOCAR (25 percent), Chevron (9.57 percent), INPEX (9.31 percent), Equinor (7.27 percent), ExxonMobil (6.79 percent), TPAO (5.73 percent), ITOCHU (3.65 percent), ONGC Videsh Limited (OVL) (2.31 percent).
The BP report also states that in the first quarter of 2019, The South Caucasus Pipeline (SCP) and South Caucasus Pipeline Expansion (SCPX) transmitted about 30 million cubic meters of gas per day.
SCP, namely the Baku-Tbilisi-Erzurum gas pipeline operating since late 2006, transports Shah Deniz gas to Azerbaijan, Georgia and Turkey, while SCPX started commercial deliveries to Turkey since 2018.
SCP and SCPX spent approximately $9 million in operating expenditure and over $17 million in capital expenditure in total.
The SCP shareholders are: BP (28.8 percent), TPAO (19 percent), AzSCP (10 percent), SGC Midstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent) and NICO (10 percent).
“Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC and SOCAR), Turkey (to BOTAS) and to BTC Company in multiple locations in the first quarter of the year,” the report reads.
Meanwhile, the Shah Deniz field produced 4.3 billion cubic metres of gas and around 1 million tons (7.5 million barrels) of condensate in total from the Shah Deniz Alpha and Shah Deniz Bravo platforms in the first three months of 2019.
The existing Shah Deniz facilities’ production capacity is currently more than 56 million standard cubic meters of gas per day or more than 20 billion cubic meters annually.
Shah Deniz spent $191 million in operating expenditure and more than $267 million in capital expenditure in January-March 2019, the majority of which was associated with the Shah Deniz 2 project.
The Shah Deniz gas field is still the biggest discovery of BP after the Prudhoe Bay oilfield in Alaska. The agreement on the exploration, development and shared production of promising areas of Shah Deniz was signed on June 4, 1996. The agreement on the division of production was ratified on October 17, 1996.
The discovery of the giant Shah Deniz field and the successful implementation of the project made Azerbaijan a country that can export a large amount of natural gas to the world. Shah Deniz 2 is the starting point of the new Southern Gas Corridor, which will deliver Caspian resources directly to European markets for the first time.
Its reserves are estimated at 1.2 trillion cubic meters of gas and 240 million tons of condensates. Within the second stage of the field development, the volume of gas production can be increased to 24 billion cubic meters per year, according to forecasts.
Shah Deniz participating interests are: BP (operator – 28.8 percent), TPAO (19 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent) and NICO (10 percent).
In the first three months of 2019, oil and gas from ACG and Shah Deniz continued to flow via subsea pipelines to the Sangachal terminal.
During the reporting period, the Sangachal terminal exported more than 69 million barrels of oil, which includes more than 61 million barrels through BTC and around 8 million barrels through the Western Route Export Pipeline (WREP).
Gas is exported via the South Caucasus Pipeline (SCP), its expansion system and via SOCAR gas pipelines connecting the terminal’s gas processing facilities with Azerigas’ national grid system. On average, about 47 million standard cubic metres of Shah Deniz gas was exported from the terminal daily in January-March 2019.
BP is one of the world's most renowned oil and gas suppliers. It has been managing large projects for exploration, development and transportation in oil and gas fields in Azerbaijan since 1992.
BP and SOCAR have long-term cooperation in the oil and gas industry of Azerbaijan. BP Azerbaijan is the operator of ACG, Shah Deniz, Shallow Water Absheron Peninsula, Shafag-Asiman and Gobustan fields.
Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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