FOR MANY YEARS TO COME

There are many dates that will be celebrated in 2024 in Azerbaijan, including the anniversary of the Contract of the Century. The Azeri-Chirag-Gunashli (ACG) oil field block development project, which launched Azerbaijan's oil strategy, will mark its 30th anniversary this year. It brought foreign investment to the country, ensured its economic and political stability and prosperous future. The date is round, the age is mature, the history is interesting. Over the 30 years we have done a tremendous work, commissioned 7 production platforms, produced 584.7 million tonnes of oil and 216.3 billion cubic metres (bcm) of associated gas. More important events related to the project are ahead of us. For example, the first oil production from the new production platform on the ACG block, Central East Azeri (CEA), is expected very soon, which will help stabilise oil production in the country. In addition, production of deep-gas will start in the same year at the ACG block. This will increase the total volume of gas production in Azerbaijan.

The visit of Gordon Birrell, bp's Executive Vice President for Production and Operations, to Baku was focused on the discussion of these projects, as well as the prospects of co-operation between the British company and Azerbaijan.

Towards optimisation

Birrell's visit lasted five days (January 16-20) and was quite productive.

The purpose of the visit was to learn about the progress of bp's business in the region and the work planned for 2024 on the projects it operates. The vice president met with the management and staff of the regional office and visited the new CBA platform recently installed offshore.

In addition, Birrell met with Prime Minister of Azerbaijan Ali Asadov, ministers of economy and environment and natural resources Mikayil Jabbarov and Mukhtar Babayev, as well as the SOCAR President Rovshan Najaf.

"They discussed issues related to bp's global and regional business, the current status of work carried out as part of energy projects implemented by the company, as well as the ongoing work to support Azerbaijan's energy transition," bp-Azerbaijan stated.

Joint construction of a solar power plant (SPP) in the Jabrayil district of Azerbaijan was also discussed.

Considering the role that ACG continues to play in the country's economy, this project was the main subject of negotiations. After all, 30 years is not only a round date, but also the period of field exploitation, which leads to the depletion of its oil reserves. Reduction of oil production affects the revenues from its sale and, accordingly, certain indicators for both the state and investors.

As oil is not a renewable source of energy, the shareholders are interested in maximising the period of field development by introducing modern technologies.

"In 2024 we will celebrate the 30th anniversary of the ACG block. For several years, we have been recording the declining rates of oil production in the field. Therefore, we continue to work both with SOCAR and the state bodies of Azerbaijan. Currently, the main topic of discussions is how to achieve the most efficient management of the fields until 2049," Bakhtiyar Aslanbeyli, bp's Vice President for Communications and External Relations for the Caspian region said.

Discussions with SOCAR are ongoing at both management and working group levels on well and reservoir rehabilitation.

"SOCAR and bp, united as a single team, are holding serious discussions on the problem of oil production reduction, extending the life of reservoirs and maximising production efficiency through both the technical capabilities of bp as operator and SOCAR," Aslanbeyli explained.

Season 4D

On January 20, 2024, bp launched a four-dimensional (4D) seismic programme. This is part of the work to further optimise the development of the Azeri, Chirag and Guneshli fields.

The objective of the programme is to study the Balakhany and Fasila productive formations on the ACG block. The studies will cover an area of 740 square kilometres under the seismic source and 507 square kilometres under the receivers. The programme will run for five years (2024-2028) and cost approximately $370m. Considering the area, cost and timing of seismic work, it is the largest seismic data collection programme conducted by bp in the world.

During the five years, it is planned to carry out 5 monitoring surveys using underwater nodes and supply vessels Murovdagh and Guba. The studies will be conducted by Caspian Geo LLC.

bp believes that these works are of great importance for the company and its project partners, as well as for Azerbaijan as a whole.

"Our mission in undertaking this large-scale seismic survey programme is to obtain detailed information on the field architecture and fluid interfacial contact dynamics. We hope that the state-of-the-art 4D technology that will be used in this programme will provide us with new and deeper information about the field. This will help us find solutions to minimise future well contingencies and maximise the oil recovery of the field for decades to come," Roshni Musai, bp's Vice President for Geology and Development in Azerbaijan, Georgia and Türkiye, said.

First oil

bp is also actively preparing for the commissioning of the new CEA production platform, which should have a positive impact on the block's overall oil production.

A CEA is a modern platform built to the latest technological standards, which, if necessary, can be adjusted remotely, i.e., without human presence.

"Expectations from this platform are high. I believe that this platform will contribute to the stabilisation of oil production at ACG in the coming years," Aslanbeyli said.

The CEA project is the next stage of development of the ACG block. The final investment decision on allocating $6b for the project was made on April 19, 2019. This involves the construction of a new production and drilling platform at a depth of 137 metres with an accommodation block between the Central Azeri and East Azeri platforms, as well as drilling of 48 wells.

bp and its partners in ACG expect to achieve daily production from CEA at peak of 100,000 barrels of oil and 350,000 cubic feet of gas per day by drilling additional wells and installing offshore facilities.

First deep gas

Another significant event of this year will be the production of gas from deep-gas reservoirs of the ACG block. Azerbaijani authorities expect that gas production from the deep-gas project will start by the end of this year. To this end, bp plans to start drilling the first production well from the West Chirag platform.

In 2023, well A22z was drilled to better estimate deep-gas reserves at ACG. Interpretation of the obtained data is ongoing, as well as discussions with SOCAR and Azerbaijani state agencies on its production, and more specifically on the technical and commercial terms of the project.

Deep-gas reserves at ACG are currently estimated at 300 billion cubic metres. It is expected that its development will contribute to increasing gas production in Azerbaijan together with other gas fields in the country: Shahdeniz, Absheron, Umid Babek.

Green support

Co-operation with bp, which was founded with the Contract of the Century, has expanded beyond oil and gas. The company actively supports small and medium-sized businesses in the country, education and environment in Azerbaijan, provides assistance in reforestation of the territories liberated from Armenian occupation and in the development of renewable energy sources (RES).

For example, in the East Zangezur economic region, bp plans to implement a project to restore historical platane forests in Zangilan and plant a forest belt.

bp is also preparing to build a new 240MW solar power plant in Jabrayil, East Zangezur. This project is of great importance for Azerbaijan, as Garabagh and East Zangezur have been declared a green energy zone, as well as for exporting this energy to international markets. This is also in line with bp's interests to expand investments in renewable energy and energy efficiency.

The Azerbaijani tax authorities have already registered the Azerbaijani representation of Shafag (Jabrayil) Solar Limited, which will implement the project. UK citizen Garry Jones (regional president of bp in Azerbaijan, Georgia and Türkiye) became the company's official representative.

It is expected that the Shafag power plant will generate 500kWh of electricity annually. After reaching the final investment agreement, the project move on to the physical construction of the plant. Both the company and the government expect this process to start this year.

In addition to their long-standing co-operation on oil and gas production, SOCAR and bp agreed to join efforts to reduce methane in Azerbaijan's oil and gas sector by signing the Methane Guidelines (MGP) and a Memorandum of Understanding.

On November 30, 2023, a new initiative to reduce methane emissions globally was announced. As part of this initiative, SOCAR and bp intend to bring together key stakeholders, partners, research institutes and government leaders to support efforts to develop a tailored roadmap to meet the requirements of Azerbaijan's energy sector.

According to the document, the companies will work together to develop knowledge and skills for methane reduction, emissions measurement, reporting, verification, etc.

"The signing of the Memorandum of Understanding with SOCAR confirms our commitment to further strengthen our relationship. We are confident that this co-operation will make a significant contribution to reducing methane emissions and protecting the climate. Together we will share experience and ideas in the field of methane management technologies, identify opportunities for joint technology trials and campaigns, and promote awareness of methane emission reduction," Afghan Isayev, Vice President of SOCAR, said.

"We are very pleased to sign this important document to significantly reduce methane emissions in Azerbaijan, which will unite our efforts in this area. (...) We believe that together we can better support the efforts of industry, society and government to reduce methane emissions. As a long-term and reliable partner of Azerbaijan, we will continue to work closely with SOCAR to make significant changes in the country's methane sector," Aslanbeyli said.

Thus, the scope of works to be carried out suggests that bp expects to stay in Azerbaijan for many years, expanding its activities. The achievements gained from the implementation of joint projects allow us to say that such fruitful mutually beneficial co-operation will continue to contribute to the development of Azerbaijan, its economy and new directions in the energy sector.