BAKU, Azerbaijan, May 15
By Leman Zeynalova – Trend:
Azeri-Chirag-Gunashli
The production sharing agreement (PSA) for developing the Azeri-Chirag-Gunashli (ACG) block of oil and gas fields was signed in September 1994, for a period of 30 years.
The oil reserves on the block account for more than one billion tons. The recoverable reserves amount to more than 500 million tons of oil.
ACG participating interests are: BP (30.37 percent), SOCAR (25 percent), MOL (replaced Chevron as of 16 April 2020 (9.57 percent), INPEX (9.31 percent), Equinor (7.27 percent), ExxonMobil (6.79 percent), TPAO (5.73 percent), ITOCHU (3.65 percent), ONGC Videsh Limited (OVL) (2.31 percent).
Project status
In January 2020, BP, the operator of the Azeri-Chirag-Gunashli (ACG) oil field announced on behalf of its partners in the ACG project – SOCAR, Chevron, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU, ONGC Videsh Ltd (OVL) – that on 26 December 2019 the field produced the 500 millionth tons of oil.
The half a billion tons of oil produced from ACG since 1997 have been transported primarily via the Baku-Tbilisi-Ceyhan and Western Route Export pipelines from the Sangachal terminal near Baku across Azerbaijan, Georgia and Turkey to the world markets.
BP will continue gas lift project at Chirag platform at the Azeri-Chirag-Gunashli block of fields in the Azerbaijani sector of the Caspian Sea throughout 2020.
The gas lift project aims to bring high pressure gas lift facilities onto a platform to add to the lifetime of the wells and through it to the production. Currently, BP is implementing this project on the Chirag platform which has been in operation since November 1997. The execution of this project is currently ongoing and will continue throughout this year.
In March 2020, Australian Worley company was awarded a contract for the gas lift project on Chirag platform at Azeri-Chirag-Gunashli. Under the contract, it will provide engineering, procurement and construction services to support production operations on the Chirag platform in the Caspian Sea. The project scope includes new gas lift flowlines and production manifolds.
In February 2020, Azerbaijan approved a deal on the purchase of US Chevron’s share by the Hungarian MOL Group oil and gas company in the development of Azeri-Chirag-Guneshli (ACG) block of fields in the Azerbaijani sector of the Caspian Sea and in the Baku-Tbilisi-Ceyhan (BTC) oil pipeline.
In April 2020, MOL successfully closed the deal with Chevron Global Ventures, Ltd and Chevron BTC Pipeline, Ltd regarding the acquisition of their non-operated E&P and mid-stream interests in Azerbaijan.
The State Oil Fund of Azerbaijan (SOFAZ) has received $1.9 billion from the project on development of the Azeri-Chirag-Gunashli (ACG) field in the Azerbaijani sector of the Caspian Sea from January 1 through May 1, 2020.
Total Azeri-Chirag-Gunashli (ACG) production for the first quarter of 2020 was on average about 524,000 barrels per day (b/d) (about 48 million barrels or more than 6.4 million tonnes in total).
During the first quarter, ACG continued to safely and reliably deliver stable production. Total ACG production for the quarter was on average about 524,000 barrels per day (b/d) (about 48 million barrels or more than 6.4 million tonnes in total) from the Chirag (39,000 b/d), Central Azeri (136,000 b/d), West Azeri (125,000 b/d), East Azeri (78,000 b/d), Deepwater Gunashli (95,000 b/d) and West Chirag (51,000 b/d) platforms,” reads the BP report on Q1 2020.
According to the forecasts of Azerbaijan’s State Oil Fund (SOFAZ) the volume of crude oil production at the Azeri-Chirag-Gunashli block of fields in 2020 is forecasted to be 186.7 million barrels.
The forecasted indicator is 10.4 million barrels less compared to 2019 (197.1 million barrels) due to lower production.
At the end of the first quarter of 2020, 129 oil wells were producing, while 42 wells were used for water and seven for gas injection.
In the first quarter of 2020, BP spent about $150 million in operating expenditure and $522 million in capital expenditure on Azeri-Chirag-Gunashli (ACG) activities.
During the first quarter of 2020, Azeri-Chirag-Gunashli (ACG) delivered an average of 7.9 million cubic metres per day of ACG associated gas to SOCAR (0.7 billion cubic metres in total), primarily at the Sangachal Terminal but also to SOCAR’s Oil Rocks facility.
The remainder of the associated gas produced was re-injected for reservoir pressure maintenance.
In the first quarter, ACG completed 4 oil producer wells.
Shah Deniz
The contract for the developing the Shah Deniz field was signed on June 4, 1996.
The contract was extended from 2036 to 2048 and the shares of SOCAR and BP (project operator) in the project were increased to 16.7 percent and 28.8 percent respectively, in accordance with the documents signed in Baku on Dec.17, 2013.
The shareholders in the contract are: BP, operator (28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent), NIOC (10 percent) and TPAO (19 percent).
Project status
In the first three months of 2020, Azerbaijan’s Shah Deniz field produced around 4.7 billion standard cubic metres (bcm) of gas and 1 million tonnes (7.7 million barrels) of condensate in total from the Shah Deniz Alpha and Shah Deniz Bravo platforms.
Production from Shah Deniz Bravo has been ramping up since the first gas delivery at the end of July 2018.
The existing Shah Deniz facilities’ production capacity is currently over 56 million standard cubic metres of gas per day or more than 20 bcma.
In the first quarter of 2020, Shah Deniz spent about $219 million in operating expenditure and $219 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project.
During the first quarter of 2020, the Shah Deniz 2 project team continued with offshore construction scope to achieve start-up from the East South flank in 2021. Subsea infrastructure installation is being executed using the Subsea Construction Vessel Khankendi and the pipelay barge Israfil Huseynov in support of delivering plateau gas production from the Shah Deniz field over the coming years.
The volume of natural gas production at the Shah Deniz gas field in 2020 is forecasted to be 18.7 billion cubic meters, according to Azerbaijan’s State Oil Fund (SOFAZ).
The forecasted indicator is 2.2 billion barrels more compared to 2019 (16.5 billion cubic meters).
The Istiglal rig and the Maersk Explorer rig have drilled 17 wells in total, and completed 16 out of those, for Shah Deniz 2 production and subsequent ramp up.
The completed wells include four wells on the North Flank, four wells on the West Flank, four wells on the East South Flank, two wells on the West South Flank and two wells on the East North flank.
One well on the West South flank was drilled to its final depth and suspended. Drilling operations will continue to deliver all wells required to ramp up to the plateau level.
During the first quarter of the year, Shah Deniz Alpha platform rig was on warm stack.
The Istiglal rig commenced drilling the lower section of the SDC05 well. The Maersk Explorer rig continues with the SDF04 well operations.
SOFAZ’s income from the sale of gas condensate produced at the Shah Deniz field from January 1 through May 1, 2020, amounted to $112 million.
Income from the sale of gas produced at the Shah Deniz field from January 1 to May 1, 2020, amounted to $59 million.
Absheron
Absheron project participants include SOCAR - 50 percent and France’s Total - 50 percent.
Engie, which previously owned a 20-percent stake, left the project in June 2017.
A contract on the Absheron field was signed Feb. 27, 2009 between SOCAR and Total.
Project status
The work on the implementation of the Absheron field development project is underway upon the schedule. No changes are planned to be made.
The first product from Absheron field is planned to be received in 2021, when the construction of infrastructure, communications, a platform and a transshipment point at the Oil Rocks is completed. The product will be transported along a pipe using a pipe-in-pipe technology to the transshipment point at the Oil Rocks, and then on land to the terminal.
Bahar and Gum Deniz
On Dec. 22, 2009, SOCAR signed a PSA contract with Bahar Energy Limited for the exploration, rehabilitation and development of the Bahar and Gum Deniz offshore fields in the Azerbaijani sector of the Caspian Sea.
The Bahar Gas Field consists of 45 offshore platforms including a central processing and metering platform to gather the gas for onward transport through a three 12-inch pipelines to the shore-based gas and liquid handling facilities. The platforms, in most cases are built on 24 to 30 pilings each in an average water depth of about 16 metres.
The Gum Deniz Oil Field is located south of the Absheron peninsula, 21 km south of Baku, between Gum Island and the Bahar Gas Field. The Gum Deniz Oil Field extends from onshore Gum Island, which is 2.5 km from the mainland to the south in the Caspian Sea. The Gum Deniz Oil Field is found along the Fatmai–Gum Adasi anticlinal trend which includes the Bahar and Shakh Deniz structures. Oil in the Gum Deniz Oil Field is trapped in a north-south trending structure that is approximately 16 kilometres in length and 3 kilometres in width. The Gum Deniz Oil Field is structurally up-dip from the Bahar Gas Field.
Project status
The fields produced more than 35,000 tons of oil and around 240 million cubic meters of natural gas in 2019.
It is planned to increase production volume up to 40,000 tons of oil and about 258 million cubic meters of gas at Azerbaijan’s Bahar and Gum-Deniz offshore fields in 2020.
It is planned to raise the production level at Bahar-Gum Deniz this year. For this purpose, there are no plans to drill new wells at these fields this year, instead, it is intended to return some deactivated wells to production and take geological and technical measures throughout the year.
Umid-Babak
Umid field was discovered by SOCAR in 2010. Risk Service Contract for this block was signed in early 2017.
Umid field is located in 75 kilometers from Baku and in 40 kilometers from the shore.
Babek structure has 400 billion cubic meters of gas and 80 million tons of condensate reserves, according to the preliminary estimates.
Project status
On February 10, 2020, Azerbaijan’s state oil company SOCAR and UK-based Liberty Steel Hartlepool, which is a part of the Liberty House Group, signed a contract on Umid-1 project. The contract envisages purchase of 20-inch submarine pipes for the transportation of gas condensate as part of the Umid -1 project for accelerating the production.
Drilling of a new well at the Umid field was launched on May 5. The design depth of the well is 6,270 meters and production volume is 1.5-2 million cubic meters of gas per day. After commissioning the well, gas production is expected to increase from 3-3.5 million cubic meters to 4.5-5 million cubic meters per day.
The design of the new well was carried out by SOCAR’s Oil and Gas Projects Institute and agreed with UK’s well-known Norwell Engineering company.
Two more wells will be drilled from the Umid-1 platform to accelerate the production at the Umid field.
It is planned to build and install another platform at the Umid field - Umid-2, as well as conduct exploration and drilling operations in the nearby Babek structure in the coming period. The Dashgil-2 terminal with a capacity of 24 million cubic meters per day is being built for the primary processing of gas and condensate which are extracted from the Umid-Babek block. The extracted product will be supplied through the underwater pipe of the terminal.
Shafag-Asiman
A 30-year contract on Shafag-Asiman was signed in October 2010. The exploration period will be four years, with possibility of extension for three more years.
The forecasted reserves of the Shafag-Asiman block stand at 500 billion cubic meters of gas and 65 million tons of condensate.
The block is located 125 kilometers south-east of Baku. Exploration work has not been conducted on the block yet. It is located at a depth of 650-800 meters with the depth of the reservoir at 7,000 meters.
Project status
SOCAR and BP announced that the first exploration well was spudded on the Shafag-Asiman offshore block in the Azerbaijan sector of the Caspian Sea on 13 January.
The SAX01 well is the first to be drilled in the contract area and is in accordance with BP’s obligations under the PSA that was ratified by the Azerbaijani parliament in 2011.
The well is planned to reach total depth of up to 7,000 metres, which is expected to take around nine months. Following this, well data will be analysed and, if successful, an evaluation program may be conducted to confirm the results.
The well is being drilled from the Heydar Aliyev semi-submersible rig operated by the Caspian Drilling Company (CDC). The rig, which has full managed-pressure drilling capability, was contracted for the SAX01 well in November 2019 and then moved to the well location in preparation for the commencement of drilling operations.
Karabagh field
The Karabagh prospective structure was identified in 1959 as a result of seismic surveys. It was specified in 1984 and its oil and gas reserves were confirmed in 1997-1998 through exploration drilling. The oilfield is located 120 km east of Baku, at a depth of 150-200 meters in the open sea.
The consortium operated by Caspian International Petroleum Company (CIPCO) drilled three exploration wells in the Karabagh PSA signed in 1995: two wells found gas in the southeast portion of the structure and the third well indicated presence of oil in the western part of the structure. In 1999, the PSA was terminated due to the non-commercial discovery.
In May 2018, SOCAR Karabagh and Equinor signed a Risk Service Agreement related to development of Karabagh Oil Field in the Azerbaijan Sector of the Caspian Sea. According to the agreement, they hold equal shares.
Since 1994, SOCAR and Equinor have been cooperating in important joint projects, including the operating of the Azeri Chirag and Deep Water Gunashli (ACG) oil field.
Project status
Azerbaijan State Oil Company SOCAR and Norwegian Equinor confirmed the fact of discovery of the Karabagh oil field in the Azerbaijani sector of the Caspian Sea, 120 kilometers east of Baku on March 19.
The well was drilled in water depth of 180 meters by the Dada Gorgud semi-submersible drilling rig operated by SOCAR’s Caspian Drilling Company (CDC). The reservoir is at a depth of approximately 3.4 kilometers. Estimated size of the discovered volumes of oil and gas are satisfactory for pursuing commercial development of the Karabagh field.
Equinor and SOCAR are discussing the project schedule for the newly-discovered Karabagh field.
It is planned to continue to mature the field development project towards investment decision. SOCAR and Equinor intend to optimize the facility design based upon results of the appraisal well.
It is planned to start the installation of a new platform in the second quarter of this year for the development of Karabagh field.
The platform jacket, constructed by Bos Shelf is almost complete. Following this, it is planned to design and construct the upper block of the platform. It is planned to drill six oil producing and three water injection wells from this platform. Moreover, two gas producing wells will be drilled at the field with underwater technology.
Depending on the market situation in coming years, the most optimal decision will be made regarding the use of the field’s product.
Ashrafi-Dan Ulduzu-Aypara (ADUA)
The ADUA exploration area is located around 50 kilometers east of Baku, around 14 kilometers to the east of Azerbaijani mainland (Absheron peninsula), and approximately 7 kilometers to the east of Azerbaijan’s Pirallahi and Chilov islands, in water depth varying between 20 and 225 meters.
Azerbaijan’s state oil company SOCAR and Statoil Azerbaijan (part of the Equinor group) signed a Production Sharing Agreement (PSA) for the Ashrafi-Dan Ulduzu-Aypara (ADUA) exploration area on May 30, 2018.
Project status
The seismic acquisition was completed at Ashrafi-Dan Ulduzu-Aypara (ADUA) in the Azerbaijani sector of the Caspian Sea in February 2020.
Norway’s Equinor company has decided to postpone the drilling of the Aypara prospect in Azerbaijan due to challenges in operating during the current Covid-19 context.
“It is too early to indicate when the well will be spudded, and a new timeline will be concluded later,” said the company.
Equinor believes that the decision to postpone the drilling will provide more time to interpret the seismic data acquired in the Ashrafi-Dan Ulduzu-Aypara license during 2019 and evaluate prospectively in the license.
Shallow waters around the Absheron Peninsula
SOCAR and BP signed a PSA-contract on joint exploration at the potentially promising structures located in the shallow waters of the Absheron Peninsula on Dec. 22, 2014.
This agreement is part of the government's plan to fully explore all the coastal areas of the Azerbaijani sector of the Caspian Sea.
The parties to the contract were BP - 50 percent, SOCAR - 50 percent.
The area of water, covered by the PSA agreement between SOCAR and BP to carry out the development and exploration work in the shallow waters of the Absheron Peninsula, extends along the southern part of the Peninsula. The area reaches 1,900 square kilometers.
The sea depth is up to 40 meters in this territory, but the depth of the potentially productive strata is 3,000-5,000 meters.
Project status
In the Shallow Water Absheron Peninsula planning for the exploration wells drilling in three selected prospective areas is ongoing. BP will commence drilling activities early next year once the upgrade of the rig selected to drill the first well is completed.
Block D230
In May 2016, BP and SOCAR signed a memorandum of understanding (MOU) to jointly explore potential prospects in the block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea.
The MOU gives BP the exclusive right to negotiate an agreement with SOCAR to explore and develop the D230 Block.
The block covers areas in a water depth of up to 300 meters with the reservoir depth of 3,000-5,000 meters.
Project status
The 3D seismic acquisition program on Block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea was safely completed.
The program, which commenced in December 2019, was completed on March 14.
On D230, a 3D seismic acquisition program, which commenced in December 2019, was successfully completed on 14 March 2020. The processing of the acquired data has started and will be followed by interpretation. If the results from the interpretation of the seismic survey are positive, we will begin planning for the first exploration well.
Goshadash
The Goshadash structure is located in the north-western part of the Absheron archipelago, in 15 kilometers from the coast, at a distance of 35-40 kilometers from Baku. The depth of water here is 10-50 meters.
Project status
On January 22, SOCAR and LUKOIL signed a memorandum of understanding on the Nakhchivan prospective structure in the Azerbaijani sector of the Caspian Sea, as well as on the exploration block covering the Caspian-Guba and Goshadash prospective structures in the shallow waters of the sea.
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