FIRST BIG OIL WAS RECEIVED IN AZERBAIJAN
Country firstly received the industrial barrels of oil at "Azeri" field located in Azerbaijan sector of the Caspian Sea. Azerbaijan International Operational Company (AIOC) which operator is BP, declared on February 14 about the beginning of oil production at Central Azeri that is a part of "Azeri"-"Chirag"-"Guneshli" field in Azerbaijan sector of the Caspian Sea. There have been begun the full development of ACG from the beginning of oil production at Azeri field. The partners on Production Sharing Agreement on the base of ACG fields are BP (operator-34,1%), Unocal (10,3%), SOCAR (10,0%), INPEX (10,0%), Statoil (8,6%), ExxonMobil (8%), TPAO (6,8%), Devon (5,6%), Itochu (3,9%) and Amerada Hess (2,7%).
New epoch
Oil production at Central Azeri (CA) located at the depth of 128 m, in 100 km to the east from Baku, began on February 13, at the first of tenth exploitation advance bores. Within 2005, the production will increase on the base of how the rest advance bores will be commissioned. The solemn ceremony of production beginning, on the base of ACG development program visited the president of the Republic of Azerbaijan Ilham Aliyev.
"Ten years ago since signing of the contract of the century, there began new epoch in Azerbaijan. Oil and gas strategy of Heydar Aliyev began to be fulfilled. For the years, Azerbaijan mutually with foreign partners achieved many successes in development of its own oil and gas fields, also there received high results.
Today, oil production at "Azeri" field is the evidence about achievement of all given tasks. Although to all difficulties, barriers, in difficult geopolitics situation, Azerbaijan successfully operated in its national sector of the Caspian Sea", - said chief of the president of the Republic of Azerbaijan. The president mentioned successes of projects' realization on construction of Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines.
More than six thousand persons studied these projects in many countries within last three and a half years.
Big oil
Addressing at the solemn ceremony dedicated to oil production from Central Azeri platform, the president of AIOC David Woodward declared that "produced oil from the first well will have very long and memorable way. Firstly this oil will pass through the units of platform are the largest in the world. Then oil will be transported through under water pipeline with the length 187 km. to onshore Sangachal terminal. Sangachal terminal has also been enlarged and became one of the largest units.
In result, first fulfilled in the Caspian Sea of the biggest operation, there has been delivered and assembled onto the bearings blocks the unit with weight 15 thousand tons, height - 145 meter. At present, there had already been drilled 10 advance bores. According to forecasts, the production from Central Azeri in 2005 will exceed 35 mln bbl (that appropriate to 93 thousand bpd of oil) or 5,5 mln. tons of oil, in 2005-2007 the production will increase for 14,5 mln. tons and will reach 20 mln. tons. There is planned the drilling of 48 wells in platform. Till 2006, there will be fulfilled the drilling of rest 38 wells.
Remind that the most quantity of oil in Azerbaijan was produced in 1941 (23,5 mln. tons). So, from the beginning of production from "Central Azeri" platform will be received the oil necessary to BTC commissioning.
Now the drilling of production wells are carried out in the West Azeri. This year from Central Azeri will be produced of oil more than from "Chirag-1" platform. The well locating at the present time there is one of the most profitable used by BP.
The depth of the first drilled well makes 4,4 km. At present this platform is one of the most modern unit in the world. 50 percent of equipment used for its preparation refined at Baku plant of deep water basic. In its preparation for operation took part more 6 thousand persons of which 75 percent were Azeri.
AIOC oil production plan
(in mln. ton per year)
2005 -12.0
2006 -21.3
2007 -22.5
2010 -35.0
2012 -50.0
Source: AIOC
Central Azeri construction is designed to process 420,000 bpd of oil. For commissioning of "Central Azeri" platform was invested totally 500 mln USD.
After "Central Azeri" there will be begun the works within the bounds of facilities totally 5 bn USD for launching of Western and Eastern Azeri. According to forecasts, annual volume of oil production from Western and Eastern Azeri will make 20 mln. tons.
Since 2008 on the base of Phase - 3 in Azerbaijan as expected will begun the exploitation of deep water part of "Guneshli" field. Annual oil production at this field will make 10 mln. tons.
So, at "Azeri-Chirag-Guneshli" fields within 30 years will be produced 50 mln. tons of oil for a year. The "Contract of the Century" considers at all 3 fields - 510 mln. tons of oil, at present was proved that the reserves made 710 mln. tons. According to the contract annually producing at these fields 7,5 mln. cub. meter of associated gas transferred to Azerbaijan.
Gas potential
According to David Woodward, in the nearest months, in addition to the PDQ, a compression and water injection platform (C&WP) will be installed in Central Azeri in the third quarter this year and bridge-linked to the PDQ to create a major offshore complex encompassing accommodation, drilling, production, processing, compression and re-injection facilities.
Oil from Central Azeri will be transported via a new 28" subsea pipeline to the onshore Sangachal Terminal, which has been expanded to receive the additional oil volumes from the ACG field including three newly-built crude storage tanks.
As it was mentioned in exclusive interview CE the president of "Azerigaz" Alikhan Melikov is ready to receive the gas from "Azeri" field. So, with this purpose at main units at Sangachal was held by specialists the operations on receiving of gas of high pressure. Until the end of year (beginning from July) is planned to transfer to "Azerigaz" approximately 300 mln. cub. meter of gas.
Gas produced from Central Azeri, beyond that used for reservoir pressure maintenance and fuel, will be exported via the new 28" subsea pipeline into the Sangachal Terminal gas processing facilities. From there the gas will be transported, via a newly built gas export pipeline into the Azerigaz system for domestic use.
According to account, production makes half million cub. meter of gas daily that since the evening of February 18 has was begun to ship to Sangachal, and ETA term is approximately after week. Oil transportation to terminal will take 2 weeks. After assembling of the other platform in October and November of the current year, there will be possible to supply approximately 7 million cub. meter of gas daily.
According to account, production makes half million cub. meter of gas daily that since the evening of February 18 has been begun to ship to Sangachal. After assembling of the other platform in October and November of the current year, there will be possible to supply daily approximately 7 million cub. meter of gas.
BTC has not still commissioned
After launching of Baku-Tbilisi-Ceyhan pipeline the oil will be pumped here from the Sangachal terminal and passed the distance 1767 km. via Azerbaijan, Georgia and Turkey territories, begin to arrive to Ceyhan terminal named after Heydar Aliyev at onshore of the Mediterranean Sea.
Refined oil from Sangachal terminal will be transported to the markets through the existing export routes Baku-Supsa, Baku-Novorossiysk and Baku-Batumi, and through Baku-Tbilisi-Ceyhan (BTC) pipeline after launching. As it aware, ExxonMobil's oil will be transported by Azpetrol through railway Baku-Batumi.
For filling of Baku-Tbilisi-Ceyhan pipeline will be needed 10 mln. bbl of oil. And this process will end within 5 months. The filling of set at Sangachal terminal of oil reservoirs from the platform at "Azeri" field will take 3 weeks, after which within 1,5 month will be filled Azerbaijan part of pipeline, within 1 months Georgian, for 2-2,5 months Turkish part.
As it was mentioned previously to journalists by the president of SOCAR Natig Aliyev the construction of BTC pipeline in Azerbaijan, Georgia and Turkey delays. Oil shipment from the first tanker loaded by Azerbaijan oil at Ceyhan terminal transported through BTC pipeline is delayed till the end of August and beginning of September 2005.
At present pipeline construction is carried out with some delays in all three countries. Previously supposed that Azerbaijan area would be ready at the end of January, Georgian and Turkish in March 2005.
Talking about construction of Azerbaijan oil pipeline area there are also delays which connected with pipeline construction via the Kura River. According to him, previously there had been planned pipeline construction via the Kura River using the technologies of horizontal drilling but we had to refuse from this plan, because of appeared problems with providing of pipeline protection. Therefore there was done some changes in the project. There is planned to build under Kura of micro tunnels. Their construction will be completed on May.
Turkish leitmotif
During the visit (on February 6-9) chairman of the Great National Parliament of Turkey Bulent Arindj declared to journalists, that Baku-Tbilisi-Ceyhan (BTC) construction will be completed in Turkey on May 2005. BTC pipeline will be launched within the second quarter of 2005.
Within meeting in Turkey with the government and BOTAS is general contractor of Turkish BTC construction Turkish side promised that all works' construction completion would be up to the end of June 30, 2005.
At present, at Ceyhan terminal where Azerbaijan oil will be delivered the construction works are almost completed. All seven reservoirs for storage of oil totally 71 mln bbl and one reserve reservoir for reducing of pressure in main reservoirs have been built. They had already painted and now are covered by safety materials of dig out around the oil storage trenches. These trenches will be gathered oil in case of its escape or any damages in reservoirs. And the special covering will not permit to oil entering to underground waters. There was built dam for 2,6 km. in the sea from which will be fulfilled tankers loading. Simultaneously, there is able the loading of two tankers. They will provide the oil from 6 loading branch, and through to branches will be pumped out the appearing within loading oil-gas.
Mainly, there is rest at terminal completion operations, equipment tests and creation of system of telecommunication and SKADA. Generally, Turkish territory has approximately 50% of whole line Baku-Tbilisi-Ceyhan and today the common volume of fulfilled operations make 93,3%. Taking into account only construction works it makes 87,6%.
At the present time, there is continued hydro statistics tests which were successfully completed at two parts of Lot A, one part of Lot B and two parts of Lot C. Also, there is continued the building of fiber optic cable to 164 km, on Lot B - to 53 km and on Lot C - to 331 km. Concerning the pumping stations then we can note that their assembling have already over. The welding operations onto main line of pipeline are completed.
According to general contractor of construction of the Turkish Botas that single reason of delay from schedule of building in Turkey were weather conditions, namely in mountain areas. At the same time Botas managers express their assurance, that the terminal will be ready for receiving of the first oil from the Caspian by the middle of the year. Terminal is able to store the seven days of oil production, and for one largest tanker displacement the 300 thousand tons will be need for unloading of two and a half reservoirs.
New terminal was built in the same territory where locates the commissioning terminal for Iraq oil. It was done with the aim of maximal reducing of influencing to environment. From the general area of Iraq terminal for new chose 135 ha of which 65 comes to the coast.
At the present time, oil pipeline route of the Turkish part with length 1076 km. and implemented the operations for pipes placing in lines preparation are completed, also there have been completed the welding operations to 1074 km, and trenching of pipes are over. 1041 km. of welded pipes have already trenched and to 1027 km of pipes are completed their digging. At that moment all operations regarding the automatic welding of the Turkish part pipeline were completed.
Let's remind that Board of directors of pipeline company BTC Co. (operator of construction and exploitation of Baku-Tbilisi-Ceyhan oil pipeline) approved the increasing of pipeline construction fees at +/- 10% from the initial budget of construction at $3 bn. In 2004 the capital charge to BTC exceeded a little $1 bn. In 2005 the fees of charge will reduce up to $700 mln. charge for filling of the pipeline and the cost of financing free. As it was mentioned previously the cost of BTC makes $3,6 bn, of this $1 bn. provides by stockholders of the project, and $2,6 bn is attracted credits. At the same time the charge for construction has been estimated at $2,95 bn. project cost also forms the charge for purchasing of oil for filling of the pipeline totally 10 mln. bbl, the charge for negotiation by financing and debt service.
REFERENCE
The length of BTC pipeline makes 1767, of this Azerbaijan - 443 km, Georgia - 248 and Turkey - 1076 km. Carrying capacity of pipeline is 50 mln. tons of oil per year. Construction began at the beginning of 2003.
The ACG Production Sharing Agreement (PSA), signed in September 1994, covers the 30-year development of the Azeri-Chirag-Guneshli contract area. It is estimated that 5.4 billion barrels of oil will be recovered during the PSA period. The field is being developed in several phases: Chirag has been producing since 1997 as part of the Early Oil Project (EOP).
In 1997 at "Chirag" field was produced early oil. Since that time the production at "Chirag" oil is transported to Sangachal terminal and then through Baku-Supsa oil pipeline exported to world market. This was the first oil produced within the bounds of the "Contract of the Century".