2021 first quarter results

ACG participating interests are: bp (30.37%), SOCAR (25.0%), MOL (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 the first quarter of 2021, we spent more than $142 million in operating expenditure and more than $463 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 first quarter of the year along with the other bp-operated activities.

The overall project detailed design engineering works were completed by the end of the quarter. The shipment of major equipment packages and bulk materials to Baku continued in support of the fabrication schedule. 

Fabrication activities on the topsides and drilling facilities for the ACE platform continued at the fabrication yard in Bibi-Heybat. These included progressing the heavy lift programme with the installation of all the cellar deck panels, the lifting into position of the first weather deck sections, and several key drilling module lifts. The mechanical package installation progressed, the pipe fabrication, erection and cable pulling commenced. The mechanical equipment packages inspection and equipment deliveries continued with living quarters and major vessel delivery on plan. The living quarters modules have been shipped from Sweden and are expected to arrive in Baku in the second quarter of 2021.

At the Heydar Aliyev Baku Deepwater Jackets factory (BDJF) the jacket fabrication continued at multiple work fronts both in the workshops and on the skid-way. Fabrication activities on the subsea structures and spools also continued.

During the quarter, the project progressed the offshore installation works associated with the produced water management on the Central Azeri platform, as well as the preparation for commencing brownfield works on the East Azeri platform in the second quarter of 2021 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 completed to allow for the planned modifications to commence in the fourth quarter.    

Overall, the engineering, procurement and fabrication works remain on track to support first production from the ACE project in 2023.

Production 

During the first quarter, ACG continued to safely and reliably deliver stable production. Total ACG production for the quarter was on average about 484,000 barrels per day (b/d) (about 44 million barrels or 6 million tonnes in total) from the Chirag (30,000 b/d), Central Azeri (112,000 b/d), West Azeri (130,000 b/d), East Azeri (79,000 b/d), Deepwater Gunashli (89,000 b/d) and West Chirag (44,000 b/d) platforms.

At the end of the quarter, 133 oil wells were producing, while 45 were used for water and eight for gas injection.

Drilling and completion

In the first quarter of 2021, ACG completed three oil producer and two injector wells. 

Associated gas

During the first quarter, ACG delivered an average of 11.6 million cubic metres per day of ACG associated gas to SOCAR (1 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 the first quarter of 2021, 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.

During the quarter, the Sangachal terminal exported more than 60 million barrels of oil and condensate. This included about 52 million barrels through Baku-Tbilisi-Ceyhan (BTC) and over 8 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, over 56 million standard cubic metres (more than 1,987 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily in the first quarter of 2021.

The BTC Co. shareholders are: bp (30.1%); AzBTC (25.00%); MOL (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 the first quarter of 2021, BTC spent more than $41 million in operating expenditure and more than $6 million in capital expenditure.

Since the 1,768 km BTC pipeline became operational in June 2006 till the end of the first quarter of 2021, it carried a total of 3.62 billion barrels (about 482 million tonnes) of crude oil loaded on 4,729 tankers and sent to world markets.

In the first quarter, around 51 million barrels (more than 6.7 million tonnes) BTC-exported crude oil was lifted at Ceyhan loaded on 70 tankers.

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%), PETRONAS (15.5%), AzSD (10.0%), LUKOIL (10.0%), NICO (10.0%) and SGC Upstream (6.7%). 

In the first quarter of 2021, Shah Deniz spent around $688 million in operating expenditure and more than $181 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.

Production

During the quarter, 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. Gas deliveries to buyers in Europe that started on 31 December 2020 also continued during the first quarter of 2021. 

In the first three months of 2021, the field produced more than 5.1 billion standard cubic metres (bcm) of gas and around 1 million tonnes (7.8 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 58 million standard cubic metres of gas per day or more than 21 bcma.

During the first quarter of 2021, the Shah Deniz 2 project achieved further major milestones in progressing the production start-up from the deep-water East South Flank (at 540m water depth) which is planned for the second quarter of 2021. This will follow completion of the related offshore construction and commissioning works which are progressing successfully to meet the start-up delivery schedule. 

Drilling

During the first quarter of the year, the Shah Deniz Alpha platform rig was on warm stack.

The Istiglal rig delivered the SDF03 subsea completion and commenced the SDF04 completion operations. The Maersk Explorer drilled the SDH03 lower section to final depth and suspended the well.

The above two rigs have already drilled 21 wells in total, and completed 17 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, three wells on the West South Flank and two wells on the East North flank. Two wells on the West South flank, one well on the North Flank and one well on the East North 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%), PETRONAS (15.5%), AzSCP (10.0%), NICO (10.0%), LUKOIL (10.0%) and SGC Midstream (6.7%). 

In the first quarter of 2021, SCP spent more than $13 million in operating expenditure and more than $2 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 the quarter, the daily average throughput of SCP was 50.74 million cubic metres of gas per day. 

On the Shafag-Asiman offshore block, the drilling of the first exploration well was completed in March 2021 to the base of the Fasila reservoir to a depth of 7,189 metres. The well encountered gas condensate resource in the penetrated reservoirs. However, the resource will need further evaluation and therefore it was decided to suspend the well to allow the evaluation of its results and the planning of the next steps for appraisal, potentially including a sidetrack appraisal well. 

In the Shallow Water Absheron Peninsula (SWAP) area, preparations are ongoing for drilling exploration wells in three prospective areas. The Environmental and Socio-economic Impact Assessment (ESIA) for the first SWAP well was disclosed in August 2020 and following public discussions was approved by the government in January 2021 providing permission to commence drilling activities in 2021.

On D230, the interpretation of the seismic data is currently ongoing. If the results from the interpretation of the seismic survey are positive, bp may start planning for an exploration well.

At the end of the first quarter of 2021, the number of bp’s Azerbaijani national employees was 2,425 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 the first quarter of 2021, bp and the co-venturers in bp-operated joint ventures spent more than $0.3 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:

• 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 the first quarter of 2021, the programme continued activities in the two key areas - financial training for regional entrepreneurs representing 25 companies from Baku, Ganja, Shamkir, Yevlakh and Tovuz and provision of various training sessions to the selected companies participating in EDP.

• 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. Currently, a total of 81 project participants continue to receive tutorial classes to prepare for entrance exams.

• 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) 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. 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. 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 sessions for the remaining streams will be resumed when face-to-face classes will be allowed as part of the COVID-19 quarantine regime in the country.

• 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 and handed over to the local government authority to serve as a daily care centre for children from vulnerable families. A total of 22 women from low income families received training to improve their skills to manage their own small businesses and were provided with necessary equipment to enable them to launch micro-level income generation activities. In addition, 36 women received training during the first quarter of 2021 and will be provided with equipment support.

• 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 admission process for the second cohort of students to be enrolled for the fall semester of 2021 was closed on 15 March with a total of 154 applications received.

• 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 the resource centre on inclusive education for teachers was provided with the relevant literature. The training course aimed to improve skills and knowledge of primary education teachers and professionals supporting children with special needs was launched in the first quarter of 2021.

• 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. The project builds on the partnership with the US-based Georgetown University to provide training 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 the environmental project as part of which a water delivery and irrigation system was established, as well as more than 10,000 trees were planted 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. Currently, a total of 30 project participants continue accessing the training sessions provided as part of this initiative.  
  

In addition, in the first quarter of 2021, bp alone spent about $0.3 million on various social and sponsorship projects in Azerbaijan. These projects included:

• 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.

• Sponsorship of the IADC Drilling Caspian 2021 Conference & Exhibition. The conference took place in February and brought together industry leaders and drilling professionals to discuss challenges and share best practices, including a cutting-edge technology advances as well as new tools and processes that can be used to improve HSE performance.

• 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.