The BP-led consortium managing Azerbaijan’s flagship Azeri-Chirag-Deepwater Gunashli (ACG) oil project has signed off on a US$6 billion expansion plan.
The new investment will help bolster output levels at the mature Caspian Sea fields while also prolonging their operational life.
In a statement on April 19, BP said it had taken an FID with its partners on the construction of a seventh platform at ACG. The Azeri Central East platform is due online in 2023 and will produce up to 100,000 bpd of crude.
According to BP, construction is slated to start in the second half of this year and wrap up in mid-2022. The facility will be positioned mid-way between the existing Central Azeri and East Azeri platforms in waters around 140 metres deep. In an email statement to NewsBase Intelligence (NBI), BP said it was “in the process of awarding major construction contracts for the platform.”
BP operates ACG with a 30.4% stake. Its partners include Azerbaijan’s SOCAR, US majors Chevron and ExxonMobil, Japan’s Inpex and Itochu, Norway’s Equinor, Turkey’s TPAO and India’s ONGC Videsh Ltd (OVL).
“[The investment] demonstrates our commitment to work with SOCAR and Azerbaijan’s government to continue to unlock ACG’s resources more efficiently and competitively,” BP’s regional president for Azerbaijan, Georgia and Turkey, Gary Jones, commented on the FID.
BP has invested more than US$36 billion in the ACG development to date. Since their launch in 1997, the fields have flowed over 3.5 billion barrels of crude and are now considered mature. But despite reaching peak output in 2010, they are still Azerbaijan’s main source of oil production, flowing around 584,000 bpd of crude last year. And according to BP, they still contain a further 3 billion recoverable barrels.
Azeri Central East’s development was made possible by a deal the ACG group reached with Baku authorities in late 2017 to extend their PSA for the fields from 2024 until the end of 2049. The consortium’s focus is now on managing output decline in order to maximise recovery and value. In its statement, BP said Azeri Central East alone would recover 300 million barrels of oil during its service life.
The expansion will further cement BP’s role as Azerbaijan’s biggest foreign investor. The company has shares in almost all the country’s major upstream and midstream ventures, including the flagship Shah Deniz gas project, also in the Caspian Sea.
The investment should also boost confidence in the Caspian Sea oil and gas sector. Projects in the region often take a long time to realise because of logistical challenges and difficult operating conditions. An infamous case in point is Kazakhstan’s Kashagan oil development, which took 16 years to start up after its discovery in 2000. As output continues to slide at ACG, Kashagan is set to replace the Azeri project as the Caspian’s main oil producer sometime in the 2020s, depending on how quickly its operators decide to ramp up output.