2020 full year results

ACG participating interests are: bp (30.37%), SOCAR (25.0%), MOL (replaced Chevron as of 16 April 2020 (9.57%), INPEX (9.31%), Equinor (7.27%), ExxonMobil (6.79%), TPAO (5.73%), ITOCHU (3.65%), ONGC Videsh Limited (OVL) (2.31%).

bp Exploration (Caspian Sea) Limited is the operator on behalf of the Contractor Parties to the ACG Production Sharing Agreement.

In 2020, we spent more than $531 million in operating expenditure and more than $1,817 million in capital expenditure on ACG activities.

Despite the challenges and restrictions caused by the pandemic the Azeri Central East (ACE) project remained remarkably resilient during the year along with other bp activities.

The detailed engineering works were substantially completed by the end of the year, and at least 10 major packages were shipped to Baku in the fourth quarter, complimenting the multiple deliveries of plate, piping and other bulk materials shipped earlier in the year.

Fabrication activities on the topsides and drilling facilities for the ACE platform continued at the fabrication yard in Bibi-Heybat. These included the lifting of the cellar deck sections on to the skid way, the placement of the first major items of equipment into position, the ramp-up of piping along with the weather deck panel fabrication, the arrival of the drilling derrick at the yard and the commencement of fabrication and assembly of the drilling modules on site. 

At the Heydar Aliyev Baku Deepwater Jackets factory (BDJF) the pin piles were completed, successfully loaded out, driven into the platform location and safely installed at the seabed ready to receive the platform jacket. The jacket fabrication continued with the first sections now out on the skid way. Fabrication activities on the subsea structures also commenced in 2020.

During the year, the project progressed with the offshore installation work associated with the produced water management on the Central Azeri platform and the preparation for work on East Azeri to allow the ACE platform to draw power from the Azeri field optimising power generation across the assets. At the Sangachal terminal the design for the onshore control room was close to completion at the end of 2020 to allow for the planned installation in 2021.    

Overall, the engineering and procurement works remain on track to support the first production from the ACE project in 2023, with the larger equipment now moving from the suppliers into Azerbaijan.

Production 

During the year, ACG continued to safely and reliably deliver stable production. Total ACG production for the full year was on average about 477,000 barrels per day (b/d) (about 175 million barrels or 23.6 million tonnes in total) from the Chirag (34,900 b/d), Central Azeri (113,200 b/d), West Azeri (118,900 b/d), East Azeri (64,200 b/d), Deepwater Gunashli (95,400 b/d) and West Chirag (50,400 b/d) platforms.

At the end of 2020, 127 oil wells were producing, while 45 wells were used for water and eight for gas injection.

Drilling and completion

In 2020, ACG completed 11 oil producer and 2 injector wells. 

Associated gas

During the year, ACG delivered an average of 6 million cubic metres per day of ACG associated gas to SOCAR (2.2 billion 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.

In 2020, 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 condensate, and about 85 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 105 million standard cubic metres per day.

In 2020, the Sangachal terminal exported about 239 million barrels of oil and condensate. This included about 208 million barrels through Baku-Tbilisi-Ceyhan (BTC) and more than 31 million barrels through the Western Route Export Pipeline (WREP).

Gas is exported via the South Caucasus Pipeline (SCP), the South Caucasus Pipeline expansion system and via SOCAR gas pipelines connecting the terminal’s gas processing facilities with Azerigas’s national grid system.

On average, about 49 million standard cubic metres (about 1,720 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the year of 2020.

The BTC Co. shareholders are: bp (30.1%); AzBTC (25.00%); MOL (replaced Chevron as of 16 April 2020 (8.90%); Equinor (8.71%); TPAO (6.53%); Eni (5.00%); Total (5.00%), ITOCHU (3.40%); INPEX (2.50%), ExxonMobil (2.50%) and ONGC (BTC) Limited (2.36%).

 

In 2020, BTC spent about $111 million in operating expenditure and about $29 million in capital expenditure.

Since the 1,768 km BTC pipeline became operational in June 2006 till the end of 2020, it carried a total of 3.57 billion barrels (more than 475 million tonnes) of crude oil loaded on 4,659 tankers and sent to world markets.

In 2020, BTC exported around 211 million barrels (more than 27.8 million tonnes) of crude oil loaded on 278 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 participating interests are: bp (operator – 28.8%), TPAO (19.0%), AzSD (10.0%), SGC Upstream (6.7%), PETRONAS (15.5%), LUKOIL (10.0%) and NICO (10.0%).

 

In 2020, Shah Deniz spent more than $1 billion in operating expenditure and $942 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.
 

Production

During the year, the 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. 

On 31 December, Shah Deniz celebrated a significant achievement by commencing first ever commercial gas deliveries to European markets via the newly-completed Southern Gas Corridor (SGC) pipeline system. The Shah Deniz field is the starting point of SGC and the commencement of gas deliveries to Europe from Shah Deniz marks the full integration of the entire SGC gas value chain, stretching 3,500 kilometres from Azerbaijan to Europe. With this important achievement Shah Deniz represents a new source of energy supply for Europe diversifying its energy market and strengthening its energy security.

In 2020, the field produced around 18.1 billion standard cubic metres (bcm) of gas and 3.6 million tonnes (29 million barrels) of condensate in total from the Shah Deniz Alpha and Shah Deniz Bravo platforms. 

The existing Shah Deniz facilities’ production capacity is currently over 56 million standard cubic metres of gas per day or more than 20 bcma.

In 2020, the Shah Deniz 2 project achieved major milestones in support of the gas production start-up from the East South Flank. The pipelay barge Israfil Huseynov safely completed the mechanical installation of two deep-water flowlines with the length of 18.3 km each. Flowline termination assemblies and other adjacent subsea infrastructure were successfully installed using the subsea construction vessel Khankendi. 

The start-up of the deep-water East South Flank (at 540m water depth) is planned for the second quarter of 2021, following completion of offshore construction and commissioning. The start-up of the two remaining deep-water flanks (West South and East North) is planned for future years and will support plateau rates of gas production.
 

Drilling

In 2020, the Shah Deniz Alpha platform rig was on warm stack.

The Istiglal rig commenced the SDF03 subsea completion operations. The Maersk Explorer suspended the SDF05 well and commenced the SDH03 lower section drilling.

The above two rigs have already drilled 20 wells in total, and completed 16 out of those, for Shah Deniz 2 production and subsequent ramp-up. The completed wells include four wells on the North Flank, four wells on the West Flank, four wells on the East South Flank, two wells on the West South Flank and two wells on the East North flank. Two wells on the West South flank were drilled to final depth and suspended. Drilling operations will continue to deliver all wells required to ramp up to plateau level.

The SCP Co. shareholders are: bp (28.8%), TPAO (19.0%), AzSCP (10.0%), SGC Midstream (6.7%), PETRONAS (15.5%), LUKOIL (10.0%) and NICO (10.0%). 

In 2020, SCP spent $47 million in operating expenditure and $13 million in capital expenditure in total.

The SCP has been operational since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey. The expanded section of the pipeline commenced commercial deliveries to Turkey in June 2018 and to Europe in December 2020.

During 2020, the daily average throughput of SCP was 33.8 million cubic metres of gas per day.

On the Shafag-Asiman offshore block, the first exploration well was spudded on 13 January 2020. Drilling activities are currently ongoing, and the well is at a depth of 5,305 metres. Once the well reaches the target depth, the well data will be analysed and, if successful, an evaluation programme may be conducted to confirm the results.

On D230, a 3D seismic acquisition programme, which commenced in December 2019, was successfully completed on 14 March 2020. The processing of the first stage of seismic data was completed in June 2020 with the final processed data delivered in the third quarter of the year. The interpretation of the data is currently ongoing. If the results from the interpretation of the seismic survey are positive, bp may start planning for an exploration well.

In the Shallow Water Absheron Peninsula (SWAP) area, planning is ongoing for drilling exploration wells in three prospective areas. Drilling activities will commence once the upgrade of the rig selected to drill the first well is completed. On 28 August, the Environmental and Socio-economic Impact Assessment (ESIA) for the first well was disclosed and following a 2-month disclosure period the ESIA document was updated and re-submitted to the government authorities to obtain necessary permissions to commence drilling activities in the second quarter of 2021.

At the end of 2020, the number of bp’s Azerbaijani national employees was 2,442 including fixed-term employees. 

Since mid-2018, 90% of bp Azerbaijan’s professional staff has been nationals. Non-professional staff of bp in Azerbaijan is 100% nationalized.

bp will continue its efforts to optimize its learning and development programmes and will actively participate in public and private sector initiatives contributing to the development of the local talent market.

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 2020, bp and the co-venturers in bp-operated joint ventures spent $3.2 million in Azerbaijan 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 (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported for two years and successfully completed in August 2020 a programme aimed at enhancing employment opportunities for people with disabilities in Azerbaijan. The programme called ‘Enhancing employability skills for people with disabilities’ aimed to develop skills and capabilities of selected people with disabilities through trainings and other specialized activities. The project also provided psychological counselling sessions to enhance the participants’ self-confidence. The first phase of the project ended in January 2019 and it moved to phase 2 in July. In phase 2, the training programme was expanded to further enhance employment opportunities for the participants. As part of the project bp Azerbaijan developed a special work placement programme and provided an opportunity for selected nine participants from phase 1 and six participants from phase 2 to engage in an international working environment practicing their new skills and learning from experienced bp staff.  In addition, an online job fair was arranged in July 2020 to help 95 participants in phase 2 find jobs.
• 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. In 2020, 63 new local companies enrolled for the programme and 17 companies graduated from it.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) has been supporting for four years a large group of 11th grade students in their efforts to prepare for higher education. The participants in the project called ‘Build your Future’, are selected from disadvantaged families. The project activities include two components – academic knowledge and social integration. In total, some 282 young people out of 315 participants in the past four academic years (90%) have been successful by meeting the requirements of the higher school entrance exams and becoming students. Based on the results and overall success of this initiative, bp and its co-venturers have decided to continue the project into the 2020-2021 academic year.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported secondary schools in enhancing IT skills teaching. As part of the three-year initiative, a new curriculum for IT-specialized secondary schools was developed in cooperation with the Ministry of Education. In addition, 50 teachers representing 25 Baku schools were trained to pilot and effectively use the new curriculum. Based on the new curriculum, new teaching and learning materials including textbooks for the 10th and 11th grades were published and donated to the selected schools. The project was successfully completed in August 2020.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported a livelihood generation project which initially covered 100 community members from the Yevlakh, Goranboy, Samukh and Shamkir districts by providing equipment, training and continuous consultancy in beekeeping and small farming. This project called ‘Sweet Gold’ was then expanded to cover two more districts - Agstafa and Tovuz, along the bp-operated pipelines. This new phase was for three years and one month (2017-2021) aiming to benefit over 500 community members and to achieve the planting of over 110,000 nectar trees for bee-breeding. In total, over 100,000 nectar trees were planted and over 530 project beneficiaries trained as part of this project, which was completed in January 2021.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported Baku Engineering University by purchasing materials for chemical experiments and installing new equipment in the 11 laboratories earlier established at that university by bp. In addition, the project scope included the translation from English into Azerbaijani of learning materials for the Chemical Engineering Department.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported ‘English for Engineers’ project which intended to enhance English language knowledge of teachers and students of the Azerbaijan State Oil and Industry University. The project helped educational capacity-building, as well as improved the university’s international co-operation. As a result, 90 teachers and about 200 students of the university benefited from the project. The project was completed in 2020.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting the transfer of international business education expertise to the country through bringing the internationally-recognized Adaptive Strategic Execution Programme to Azerbaijan, basing it at Baku’s ADA University. Overall, six streams are planned within the duration of the project covering a total of up to 108 students and of these, two streams with a total of 44 participants have been completed. The training programme of the project is certified by the Fuqua School of Business at Duke University (USA) and is based on a world-class business education curriculum developed by Duke Corporate Education (Duke CE), a leader in providing executive education globally. The project is designed to help meet the current market demand in executive education.
  
• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is implementing a project to support development of micro-entrepreneurial skills and capabilities of rural women, as well as to enhance their self-employment opportunities. As part of the project, a Community Family Support Club was established in Tovuz to serve as daily care centre for children from vulnerable families. In addition, a total of 22 women received training to improve their skills to manage their own small businesses and were provided with necessary equipment to enable them to launch their micro-level income generation activities.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a three-year educational project to strengthen data analytics research and training capacity in Azerbaijan. This will be achieved through establishing a competitive and sustainable dual Master of Science in Computer Science and Master of Science in Data Analytics (MSCS/DA) degree programme, as well as further developing the Centre for Data Analytics Research at ADA University. A total of 20 students who were selected for the first cohort, completed the first semester online. The call for the second cohort of students has already started.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) successfully completed a social project which strengthened project management capabilities of over 15 local universities. Out of 45 project participants who benefited from the trainings, 41 became internationally certified project management specialists (Certified International Project Management Associates, Level D) and formed project management teams in their respective universities. A textbook on project management was prepared and printed in the Azerbaijani language to be used as a manual during the trainings.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) supported a pre-school educational project which brought together a group of local experts to develop a learning material for parents, childcare specialists and pre-school teachers. The learning material, which was successfully prepared and made public, is comprised of 12 sections, and provides recommendations and guidance on effective care of children from birth to school age. The project was successfully completed in 2020.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) launched a new social project to support inclusive education in the Tovuz and Agstafa districts. As part of the project, school and pre-school teachers were provided with learning materials and trainings on 10 inclusive education related themes. Training materials and informational books about inclusive education (including practical recommendations for organization of learning process as part of inclusive education environment) were prepared, and resource centre on inclusive education for teachers was provided with the relevant literature.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a social project to help local professionals who treat children with disabilities and developmental delays. A practical training centre will be established in one of the local universities in partnership with the US-based Georgetown University to provide trainings for local professionals aiming to enhance the in-country network of child development services.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) is supporting a project aiming to empower school students to make thoughtful decisions in their career choice. About 500 school students will be provided with training and mentorship opportunities to help them identify their individual interests and gaps, as well as obtain knowledge and skills needed to achieve their career goals. The project also aims to enhance public awareness about the importance of vocational education. Over 100 students who joined the ‘career guidance’ test, were provided with consultations and soft skills training to improve their analytical thinking and communication skills.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) successfully completed a project aimed to improve scientific research and publication performance of the local universities. As part of the project, 10 local universities were provided with access to Scopus (Elsevier’s abstract and citation database) and were trained on how to use it.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) commenced a new environmental project to promote the tree planting activities. As part of the project, a water delivery and irrigation system was established to enable planting of 10,000 trees in 11 hectares of public land located near Khojasan settlement in the suburb of Baku.

• bp (on behalf of the co-venturers in the joint ventures that bp operates in Azerbaijan) joined the IBA Tech Academy initiative by funding the training of 200 Azerbaijani citizens jointly with the International Bank of Azerbaijan. The project is in support of training the new generation of digital workforce for the country and is part of bp and its co-venturers’ commitment to helping enhance overall capacity-building in Azerbaijan.
  

In addition, in 2020, bp alone spent more than $4.2 million on various social and sponsorship projects in Azerbaijan. These projects included:

• bp’s recent $3 million support to the country in its fight to relieve the COVID-19 pandemic situation. This contribution was specifically spent to purchase overseas biochemical and PCR laboratories, bring them to the country and install in TABIB’s New Clinics, also to purchase and bring to the country 100,000 PCR testing sets and associated consumables/reagents and three isolation capsules for exceptionally contagious cases. The donation was meant to help enhance the country’s capability to effectively diagnose and treat COVID-19 cases and strengthen the country’s healthcare services in general. In addition, there was a further over 100,000 AZN donation for the same purpose by bp’s employees in Azerbaijan and a $10,000 worth Castrol lubricants donation by bp Turkey Lubricants meant for TABIB ambulances.

• Translation from English into Azerbaijani and publication of 10 academic textbooks on sustainability and supply chain management; human resources management; media and mass communications; banking and financial markets, principles of marketing; fundamentals of management; political science; social sciences; case management; ethics and values in social work. It is expected that this project will help raise the quality of teaching of these disciplines in higher educational institutions benefiting more than 17,000 students at 10 universities. To date, six books have been translated and donated to local universities and libraries.

• bp’s ongoing support for the development of sport through the partnership with Azerbaijan’s National Olympic and Paralympic Committees. As part of this partnership, bp funds a series of development programmes. In 2016, bp extended its partnership agreement to support Azerbaijan’s national teams and both National Committees.

• Support for a youth project called ‘Yuksel’ to help students and young people realize their professional dreams and develop individual qualities. The main idea of the project is to inspire young people to success and achievements. As part of the project, renowned people and well known specialists, who can serve as role models for young people, lead workshops at Baku Book Centre every week and  present their audience with books purchased by bp on the subjects they cover at the workshops.

• Sponsorship of ‘Innoweek – Innovation week 2020’ initiated by the Ministry of Transport, Communications and High Technologies and co-organized by the United Nations Development Programme, Innovation Agency, as well as Azercell Telecom LLC. The intent of the event was to promote the development of innovative ideas within the country, accelerate the process of formation of innovation ecosystem, help expand the startup movement and foster innovative thinking among young people.

• bp’s bursary programme re-launched in late 2019. The programme aims to improve English language skills of the second-year students representing petrochemical universities. This will enable the students to pursue their career ambitions more confidently with improved English language skills.