BP and partners sanction Caspian Sea project worth $6 billion
The $6 billion worth Azeri Central East (ACE) project, the next stage of development of the giant ACG field in the Azerbaijan sector of the Caspian Sea, has been sanctioned.
The investment decision follows an agreement with the Government of Azerbaijan to extend the life of the ACG field until 2049. ACG is a super-giant field and to date more than 3.5 billion barrels (474 million tonnes) of oil have been produced from the field. The oil is exported to world markets, primarily via the Baku-Tbilisi-Ceyhan and Western Route Export pipelines.
The project has been sanctioned by the Steering Committee for the development of the Azeri and Chirag fields and the Deep Water portion of the Gunashli (ACG) field – including SOCAR, BP, Chevron, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU, and ONGC Videsh.
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 said on Friday.
The sanction is the first major investment decision by the ACG partnership since the extension of the ACG production sharing agreement (PSA) to 2049 was agreed in 2017. More than $36 billion has been invested into the development of the ACG area since the original PSA was signed in 1994.
Construction activities to create up to 8,000 jobs
Construction activities, which will start this year and run through mid-2022, will take place in-country utilizing local resources. It is expected that, at peak, construction activities will create up to 8,000 jobs.
Rovnaq Abdullayev, president of SOCAR, said: “Today’s sanctioning marks yet another important milestone in the development of ACG for the benefit of the nation, which began 25 years ago with the signing of the Contract of the Century.
“For decades, SOCAR has been reinvesting Azerbaijan’s oil revenues in the development of a highly qualified workforce and modern industrial facilities in our country.”
He added: “Looking forward, we expect more than 3 billion barrels of additional oil production from ACG. This strategic decision supports Azerbaijan’s increasing role as an energy supplier for the regional and global markets.”
BP chief executive Bob Dudley said: “Working together over the past 25 years, this remarkable partnership has turned these world-class assets into tremendous benefits for the people of Azerbaijan. The ACE extension builds on that legacy and helps ensure that the next quarter century will be just as bright.”
Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey, added: “Today’s announcement supports the long-term production plans we set for ACG when we extended the PSA. It demonstrates our commitment to work with SOCAR and Azerbaijan’s Government to continue to unlock ACG’s resources more efficiently and competitively.”
The Azeri Central East (ACE) project is centered on a new 48-slot production, drilling and quarters platform located mid-way between the existing Central Azeri and East Azeri platforms in a water depth of approximately 140 meters. The project will also include new infield pipelines to transfer oil and gas from the ACE platform to the existing ACG Phase 2 oil and gas export pipelines for transportation to the onshore Sangachal Terminal.
In addition, there will be a water injection pipeline installed between the East Azeri and ACE platforms to supply injection water from the Central Azeri compression and water injection platform to the ACE facilities.
ACG participating interests are: BP (30.37 per cent), SOCAR (25.0 per cent), Chevron (9.57 per cent), INPEX (9.31 per cent), Equinor (7.27 per cent), ExxonMobil (6.79 per cent), TPAO (5.73 per cent), ITOCHU (3.65 per cent), ONGC Videsh Limited (OVL) (2.31 per cent).
Equinor eyes international growth
In a separate statement on Friday Equinor said that, in addition to the ACG ACE decision, it is pursuing other opportunities in Azerbaijan.
Equinor and partner SOCAR are planning to drill an appraisal well later this year in the Karabagh license, a discovery from 2000. Following the drilling in Karabagh, the plan is to drill the Aypara exploration well in the Ashrafi, Dan Ulduzu, Aypara license.
Torgrim Reitan, Executive vice president for Development & Production International (DPI) in Equinor, said: “Equinor had an average daily equity production of 854,000 barrels per day outside Norway in the fourth quarter of 2018. We want to grow internationally, take on more operatorships and seek growth options. Azerbaijan is an important country for Equinor and over the last few years we have been able to develop new growth opportunities in the region. The decision to add one platform to the ACG field is contributing to Equinor’s international strategy.”
ACG currently has eight offshore platforms – six production platforms and two process, gas compression, water injection and utilities platforms. The platforms export oil and gas to the Sangachal Terminal, one of the world’s largest oil and gas terminals, onshore near Baku. In 2018, total production from ACG averaged 584,000 barrels per day,
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