DEVELOPMENT PHASE OF AZERI, CHIRAG, GUNASHLI FIELDS SANCTIONED
BAKU-TBILISI-CEYHAN BUILT BY 85%
Azerbaijan realizes own petroleum strategy itself, successfully cooperates with different companies in national sector of the Caspian and possesses very favorable investment climate. Testimony of this is 23 oil contracts with 25 oil companies. More than $50 bn will be invested in Azerbaijan within framework of their realization. Today more than $10 bn investments have been invested, the same amount will be invested in the following 3-4 years. Azeri president Ilham Aliyev said this acting at the solemn ceremony dedicated to 10th anniversary of the Contract of the Century in September 20 in Baku.
Contract of the Century
The Contract fully meets economic interests of Azerbaijan. At the same time, rather accessible conditions have been created as well for foreign investors. Otherwise, it would be impossible to bring Azerbaijan to this amount of investments.
"Foreign partners of Azerbaijan are sure that every manat, every dollar invested in Azerbaijan is duly protected, the country's legislation guarantees this", - stressed head of the government. Today Azerbaijan is a reliable partner, which is of extreme importance. Recognition of Azerbaijan as a very reliable, stable, favorable country for foreign investments was of great importance for the country. This is observed in the investments both in oil and non-oil branches. It testifies of that rating of Azerbaijan, its image in the international market, in the whole world is increasing and strengthening headily to achieve all-round development of the republic.
According to I.Aliyev, the basis of it was laid 10 years ago by signature of the so-called Contract of the Century - contract on development of the Azeri-Chirag-Gunashli (ACG) block of fields in Azerbaijan sector of the Caspian. "Following signature of this agreement they began investing in Azerbaijan. Azerbaijan became a leader not only in the post-soviet space, but also among many other countries", - stressed I.Aliyev.
Signature of the Contract of the Century is the result of policy of the ex-president of Azerbaijan Heydar Aliyev. "10 years ago the national leader of Azerbaijan Heydar Aliyev laid the foundation of the country's oil strategy by signing of the Contract", - said I.Aliyev. "The role of the Contract of the Century in modern history of Azerbaijan is of exclusive importance. Billions of dollars of investments were invested in the country, infrastructure was created. Modern drilling rigs were rebuilt and commissioned in Azerbaijan. Today Azerbaijan possesses four modern drilling rigs meeting all the world standards - Dada Gorgud, Istiglal, Gurtulush and the huge Heydar Aliyev drilling rig. Tens of thousands of new work places were opened in the country, significant means entered the budget as taxes. In a word, the Contract of the Century played a great role in modern history of Azerbaijan in all respects", - summed up I.Aliyev.
Presently building of the Baku-Tbilisi-Ceyhan pipeline is nearing completion, and very soon it will be commissioned. The other oil lines - Baku-Novorossisk, Baku-Supsa are being operated. Following commissioning of the Baku-Tbilisi-Ceyhan oil line the revenues to the country's economy will grow and it will enable solving all the social and economic problems standing before the government.
The Shah Deniz gas field located in Azerbaijan sector of the Caspian Sea will play as well a very significant role in further development of Azerbaijan. Head of the government expressed confidence in successful maintenance of transportation of the gas produced in the Shah Deniz field to Turkey and Europe.
New stage of construction
Steering Committee for development of Azeri, Chirag and DeepWater Gunashli (ACG) fields in Azerbaijan sector of the Caspian Sea (SOCAR - 10%, BP - 34,1%, Unocal - 10,3%, Inpex - 10,0%, Statoil - 8,6%, ExxonMobil - 8%, TPAO - 6,8%, Devon - 5,6%, Itochu - 3,9%, Amerada Hess - 2,7%) sanctioned the construction stage of ACG Phase 3 project in September 20 in Baku. Official signing of the Phase 3 project sanction resolution took place in a ceremony held at the Heydar Aliyev Republican Palace as part of the ACG contract 10th Anniversary Celebration. Phase 3 sanctioning is a significant event at realization of full development of ACG fields, which will finally provide production of over one million barrels of oil per day.
BP Azerbaijan president David Woodword said at the press conference that the Phase 3 project costs $4.7 bn. About $3.2 bn of this sum will be spent on building of assets, the rest - on drilling of operational wells during the operation period.
DeepWater Gunashli will be developed within the Phase 3 ACG project on ACG yard. In addition, potential stocks will be possible to produce within Phase 3 in western part of the Chirag yard, which is impossible from the Chirag platform.
By 2009 ACG production will grow to one million barrels per day. Produced stocks of Deepwater Gunashli contractual yard of ACG PSA total to about 176 mln tons (around 1.25 bn barrels). Presently Phase-3 oil production is planned for mid 2008 and maximal production is to make about 300,000 b/d. All associated gas, except for fuel gas requirements will be delivered to SOCAR.
Two platforms will be installed within Phase-3 in Deepwater Gunashli - one drilling platform with accommodation blocks, one for production, gas compression and water injection. The drilling platform wil be intended for 48 wells, of which 13 will be water-injection. Both the platforms will be installed actually simultaneously in order to start water pumping at the same time with oil production. The producing platform's capacity will be more than 300,000 b/d and 350 mln cubic feet of gas.
Phase 3 offshore facilities will be largely identical to those of Central Azeri. They will comprise a 48-slot Drilling, Utilities and Quarters (DUQ) platform bridge-linked to a Production, Compression, Water Injection and Utilities (PCWU) platform in Deepwater Gunashli located in 175m of water. Both installations will be operational prior to first oil. To provide early reservoir pressure support and a faster ramp up of the oil production rate, two subsea manifolds will be constructed with up to ten subsea water injection wells to be drilled prior to first oil.
Oil will be exported to Sangachal via new infield lines tied to two 30" oil pipelines installed for the Azeri project. Associated gas production will be compressed and delivered via the 28" subsea pipeline to Sangachal. In addition, the Sangachal terminal will be further expanded by two oil trains, a third 800,000-barrel capacity oil storage tank and a second dew point control unit to process Phase 3 increment production.
Recoverable field reserves in ACG are estimated at around 730 mln tons (5.4 bn barrels) of oil - a super-giant field on any global basis. Overall the ACG field development will require seven offshore structures and over 400 wells including Chirag and sidetracks.
Aktau-Baku
Potential oil transportation from Kashagan via the Baku-Tbilisi-Ceyhan (BTC) oil line under construction will start after the given field's operation in 2007-2008. Presently negotiations between Azerbaijan and Kazakhstan on coordination of the intergovernmental agreement to promote to delivery of Kashagan oil to Azerbaijan for its further transportation via BTC keep on.
Meanwhile, D.Woodward says, the Baku-Tbilisi-Ceyhan oil line construction is "economically profitable exclusively on the basis of oil transfer from ACG fields, i.e. from the economic standpoint it does not depend on oil transportation from the Kashagan field".
Following the given draft agreement's coordination by working groups headed by the NC KazMunayGas director Kairgeldy Kabildin (RK) and SOCAR president Natig Aliyev, the document will be presented for the two countries' consideration.
Following signature of the Azerbaijan-Kazakhstan intergovernmental agreement on transportation of Kazakhstan oil via BTC, the Aktau-Baku system investors and governments of Azerbaijan and Kazakhstan will sign transit agreements.
A new oil storage and transshipment terminal in Kurik (port in 76km southeast from Aktau) is intended for creation of the Aktau-Baku system, as well as the connecting pipelines. The system's transshipment capacity will make 20 mln t/y, with up to 7.5 mln tons delivered at first stage. The amount of investments will be defined after signature of the intergovernmental agreement. The new system will be built to the moment first oil comes from the Kashagan field.
A separate company will be created for management of the Aktau-Baku system. Its major investors will be four companies - ENI, TotalFinaElf, ConocoPhilips and Inpex taking part in development of Kazakhstan field Kashagan and possessing 15% participation share in BTC Co (pipeline construction and employment operator).
Today the BTC construction partners have already opened the corridor of 1760 km length from Baku till Ceyhan and welded over 90% pipes. In total, 85% of the project is finished. When Azeri project oil production commences, the Baku-Tbilisi-Ceyhan pipeline will be ready to receive first oil, and in the second half of next year - to dispatch of first tanker from Ceyhan. D.Woodward said this in September 20 at the solemn ceremony dedicated to 10th anniversary of the Contract of the Century.
Turkish minister for energy and mineral resources Khilmi Guler confirmed at the event that first Azerbaijan oil will flow from the Mediterranean port Ceyhan in May 2005. With this purpose a solemn monitoring will be organized in Ceyhan.
BTC oil line is 1768 km, of this in Azerbaijan - 443 km, in Georgia - 249 km, in Turkey - 1076 km. The pipeline's capacity is 50 mln t/y. The project's cost totals to $3.6 bn.
Construction commenced in April 2003 and will finish in early 2005. Export of Azerbaijan oil from the Ceyhan port (Turkey) is intended for the 2nd half of 2005. BTC Co includes: BP (30.1% share participation), SOCAR (25%), Unocal (8.9%), Statoil (8.71%), TPAO (6.53%), Eni (5%), Itochu (3.4%), ConocoPhillips (2.5%), Inpex (2.5%), TotalFinaElf (5%) and Amerada Hess (2.36%). The construction costs $2.95 bn.