TBY talks to Rashid Javanshir, Regional President for Azerbaijan, Georgia, and Turkey at BP, on progress in the oil and gas sector, the Shafag-Asiman exploration project, and the ACG and Shah Deniz fields.
TBY How would you assess BP’s progress in Azerbaijan?
RASHID JAVANSHIR BP has built excellent relationships with its Azerbaijani partners, based on their confidence in our ability to deliver strategic projects. BP operates several major oil and gas development and transportation projects, including the Azeri-Chirag-Guneshli (ACG) oil fields, the Shah Deniz gas field development project, and the world-class Baku-Tbilisi-Ceyhan (BTC) oil pipeline. BP is also the technical operator of the South Caucasus Pipeline, which transports gas through Azerbaijan and Georgia. Since BP started operations in Azerbaijan 20 years ago, we have managed: 1.9 billion barrels of total production from ACG; about $35 billion of total investment in the country together with our partners; tens of thousands of local jobs, over 1.3 billion barrels of crude oil carried by BTC to the world market on over 1,800 tankers; a $20 billion investment in the Shah Deniz Phase II project (which will deliver 16 billion cubic meters of additional gas per year); the new Shafag-Asiman exploration project; and about $55 million spent in support of the social and cultural development of local communities. Our results in Azerbaijan are impressive, and I firmly believe we will continue to meet our long-term commitment to support Azerbaijan in becoming a regional leader with a strong, sustainable economy.
What is the significance of the Shafag-Asiman exploration drilling project?
The Shafag-Asiman project is one of BP’s production-sharing agreements (PSAs) in Azerbaijan, which was established in 1998. The Shafag-Asiman project presents an exciting opportunity, and we hope it will enhance our operations in the Caspian Sea. This PSA differs from others, as it is our first project with just one other partner, the State Oil Company of Azerbaijan Republic (SOCAR). We believe that the project will reinforce our relationship and take our partnership to a higher level. This PSA is also a good opportunity to further expand Azerbaijan’s natural resource base. We conducted the first 3D seismic survey in Azerbaijan on the contracted area. The geographical survey was finished in January 2012, and we will be processing the data we have collected throughout the year. Caspian Geophysical is undertaking a portion of the data collection. Upon its completion, it will be the largest 3D survey ever processed on site. It may take up to 18 months to interpret the data, and an additional year to plan the first exploration well. We will be working with SOCAR to develop our drilling plans for this challenging and important exploration project.
How much investment has gone into making the ACG oil fields successful?
The ACG oil fields are some of the largest in the world and the most productive in the Caspian. We have invested about $22 billion in the development of the fields, in collaboration with our partners. The new platform, West Chirag, is planned to increase oil production and recovery from the ACG field. It will be located between the existing Deepwater Guneshli (DWG) and Chirag platforms. We began construction on West Chirag, the sixth platform of the ACG, more than 15 years ago. The first oil from the new platform will be pumped in late 2013.
How relevant is the Shah Deniz field within BP’s oil and gas portfolio? What can we expect in terms of production from Stage II of the project?
The Shah Deniz field is one of the most expansive fields operated by BP worldwide, and Stage II is currently the largest project in BP’s international portfolio. The project is designed to bring a diverse selection of gas and energy products to our European markets through the new Southern Gas Corridor. We expect to begin the delivery of Shah Deniz gas in 2017. In terms of production, Phase I supplies 8.6 billion cubic meters (bcm) of gas per year, and approximately 50,000 barrels of condensate per day. Phase II will focus on the remaining resource potential in the current reservoir intervals, adding 16 bcm of gas per year and up to 100,000 barrels of condensate per day.
What’s the importance of the recently signed energy agreements between Turkey and Azerbaijan witnessed by Prime Minister Recep Tayyip Erdoğan and President Ilham Aliyev?
We were delighted to see these agreements signed as they support our efforts to take the giant Shah Deniz full-filed development (FFD) project further. These agreements include gas sales and transit agreements with Turkey, and technical cooperation agreement with BOTAŞ—all within the inter-governmental agreement. They provide the legal framework for the sale of 6 bcm per year of Shah Deniz future gas to Turkey and for the transportation of 10 bcm per year of Shah Deniz FFD and other Azerbaijan-sourced gas to European markets through Turkey. Our current plans are to continue the engineering studies that will enable the project to move into the front-end engineering design phase this year. In parallel we also continue the pipeline selection process with plans to make a decision in the coming months as to which pipeline routes will form the Southern Gas Corridor—a suggested new link between the Caspian and Europe. Gas from Shah Deniz FFD will follow almost the same route as the current South Caucasus Pipeline (SCP) through Azerbaijan and Georgia. In Turkey, according to the recently signed agreements between Azerbaijan and Turkey, transportation of Shah Deniz FFD gas to the European markets will either use existing BOTAŞ transmission network or new pipeline infrastructure—the so called Trans-Anatolian-Pipeline (TANAP). These options are currently being evaluated with a decision expected later this year. We are also working to assess the options that will deliver gas from Turkey onward to Europe and no decision has yet been made on the route selection. Significant progress has been made in this evaluation process. Three third-party pipeline projects have been considered: IGI Poseidon and TAP to Italy, and Nabucco toward Central Europe. A fourth project toward Central Europe, SEEP, which has been proposed by members of the Shah Deniz consortium, is also being considered.
What projects has BP been involved in to help protect the environment?
Protection of the environment is among BP’s first priorities along with our commitment to safety of people and our operations. In Azerbaijan, as part of our operations we regularly conduct various environmental studies including baseline and environmental impact assessment studies. We also conduct environmental monitoring programs covering offshore, near shore, and onshore areas of our activity such as around platforms, along pipelines, and at terminals. We use the best available technology in our operations that allows us to reduce and mitigate impact on the environment. Together with relevant governmental bodies we develop and test oil spill response plans using the best international practice and standards. In addition, together with our partners we have supported a number of major environmental investment initiatives such as “Green Pack and Training of Teachers on Green Pack Methodology” to raise schoolchildren’s awareness of the importance of protection of the environment, and the “Energy Bus” project, which promotes development of alternative energy sources. We hope the effect of these initiatives will be sustainable and contribute to enhancing awareness in the communities.
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