Azernews.Az

By Nigar Orujova

BP and its partners produced 187.4 million barrels, or 25.3 million tons, of oil from Azerbaijan's Azeri-Chirag-Gunashli (ACG) block of fields in the Caspian Sea during the first nine months of 2012, BP said on Monday.

The figure indicated a drop in production rates as compared to the same period of 2011, when production was about 206.8 million barrels or 30 million tons of oil.

Average daily oil production on ACG was 684,000 barrels in January-September. In the same period in 2011, 757,000 barrels per day were extracted.

Over the nine months of 2012, ACG spent $539.7 million in operating expenditure and $1.807 million in capital expenditure, BP said.

First Vice President of the Azerbaijani state oil company SOCAR, Khoshbakht Yusifzade, said on Monday that BP Azerbaijan is conducting all the necessary work to ensure stable production volume at the ACG oil and gas fields in 2013.

The fall in oil and gas production on the ACG block should not occur so early, Yusifzade said at a meeting of the Caspian-European Integration Business Club (CEIBC) on Monday.

Yusifzade noted that work is underway to normalize and stabilize production, to ensure that production volumes in 2013 are no less than in 2012.

Earlier in November, BP completed an in-depth review of the ACG fields' performance. The review was conducted by a group of representatives of senior global functional leadership in the area of production management, led by Head of Subsurface Ian Cavanagh.

"The review concentrated on identifying actions to address critical areas which we believe are vital to underpinning production in 2013 and beyond," Cavanagh said.

BP plans to bring to Baku 12 subsurface specialists that have been selected to support the team in Azerbaijan.

Azerbaijani President Ilham Aliyev criticized BP at a cabinet meeting in October, saying crude mistakes of the BP-operated international consortium, Azerbaijan International Operating Company, have led to a sharp decline in oil production on Azeri and Chirag fields, which are part of the ACG development, the largest oil fields in the Azerbaijan sector of the Caspian. According to President Aliyev, BP failed to meet the production target in 2009-12, which resulted in Azerbaijan's receiving $8.1 billion less in direct revenue from what is one of the company's biggest projects in the world.

Commenting on the president's criticism, SOCAR head Rovnag Abdullayev has said that partners in the project on tapping the ACG fields are developing a long-term program that forecasts ACG production until 2024.

ACG partners plan to approve a program of production for next year by late November, Abdullayev said on November 7.

According to the program on ACG production in 2013, 2014 and the period 2014-2024, output is projected to stabilize at 33 million tons (700,000 barrels a day) of oil in 2013.

The following year, it will increase to 35 mln tons. From 2015 to 2024, the production volume will be stable again at 33 mln tons.

The ACG project has delivered total investment of $24.8 bn. The project also has led to the creation of jobs and development of national staff, with permanent jobs including contractors numbering over 6,000; over 12,000 temporary jobs were created during the construction phase.

As for social projects, total social spend in Azerbaijan by BP and co-venturers since the start of activities in Azerbaijan in 1994 till the end of the third quarter of 2012 was more than $56 miliion, with ACG accounting for about 30% of the amount, or over $17 million.

A landmark agreement on developing the ACG fields was signed with 13 energy majors from eight countries in Baku in 1994. ACG participating interests are: BP (35.83%), SOCAR (11.65%), Chevron (11.27%), Inpex (10.96%), Statoil (8.56%), ExxonMobil (8%), TPAO (6.75%), Itochu (4.3%), and Hess (2.72%). Hess has sold its share in the project to India's ONGC, and the transaction will be completed in the first quarter of 2013.