10.4 BP Current Developments Major Progress on Azeri Project by Tamam Bayatly

Winter 2002 (10.4)
Pages 88-89

BP Current Developments
Major Progress on Azeri Project
by Tamam Bayatly

During 2002 BP Azerbaijan safety performance has been excellent with only a single case of a person being away from work. By the end of 2002, personnel had worked over 10 million man - hours. Since the start of the Construction Phase of the Azeri project which was sanctioned in August 2001 (Central Azeri) and September 2002 (East and West Azeri), BP has been working very closely with all their contractors to maintain this excellent safety record. In October the existing Sangachal Terminal and Northern Route Export Pipeline (via Russia) celebrated five years (more than 2 million man-hours) without a single day away from work. In December 2002, the Terminal Expansion Project celebrated 2
million man-hours.

Below (left): BP sponsored Azerbaijan's Junior Chess Team that competed in the European Championship in Spain. Azerbaijani youth won three gold medals.

Right: Winners of the 4th SOCAR Cup Tennis Tournament, 2002

Increased Production
BP delivered increased production from Azeri-Chirag-Deepwater Gunashli (ACG) base operations by 7 percent as a result of expanding and streamlining the existing oil and gas facilities on Chirag and Western Export Route facilities. In 2002, the average production rate from the Chirag platform increased to 128,000 barrels of oil per day (bpd) compared to the 127,000 bpd target. In November, the average production rate increased to133,225 bpd.

In 2002, AIOC partners and Azerbaijan lifted 42 tanker-loads (5.65 million tons) from Supsa, including seven tanker-loads (0.95 million tons) profit oil, which has been sent to world markets via the Western Route Export Pipeline system (via Georgia). In addition, 2.3 million tons of oil (including SOCAR non-ACG oil) has been transported this year via the Northern Route Export system, filling 20 tanker-loads, including 19 tank ships with SOCAR oil from Novorossiysk.

Azeri Project Making Great Progress
Recently, the Central Azeri (Phase 1) and East and West Azeri (Phase 2) projects have been combined into one project under one management as the Azeri Field Development Project. These works are on track, with Central Azeri 50 percent completed by the end of 2002. The project employs 3,500 Azerbaijan nationals through its construction works, and may eventually employ more than 5,000 people. More than 30 local companies are already participating in BP's construction activities. Successful training of local personnel continues to exceed expectations, with some of the contractors' training programs nearing completion ahead of schedule. Work has also commenced on the West Azeri template, which is due for completion in the second quarter of 2003.

Below (Left): Central Azeri construction works are 50 percent complete and currently employ 3,500 Azerbaijan nationals.

Center: Planting trees in Sangachal by the non-governmental organization (NGO) Karvan within a BP-awarded Biodiversity Project.

Right: Dr. Safar Ashurov of Azerbaijan's Institute of Archaeology and Ethnography carefully digs into the Borsunlu Burial Mounds discovered along the Azerbaijan section of the BTC pipeline route.

Azeri Pre-Drilling Program
The Azeri Pre-drilling Program comprises three main sub-programs, referred to as Central Azeri (CA) Pre-drilling, West Azeri (WA) Pre-drilling and East Azeri (EA) Pre-drilling. The purpose of the pre-drilling operations is to have a number of wells in place prior to the permanent platform installations so that production from each field can begin as early as possible, providing revenues to Azerbaijan and the companies participating in the project. Second, it will provide data about the geology and distribution of hydrocarbons prior to production drilling from the platforms.

The CA pre-drilling program will use the Dada Gorgud to drill 12 wells: 10 production wells, one cuttings re-injection well and one gas injection well. The program commenced in March 2002 and is expected to be complete by mid-August 2003. Wells 1 to 4 are already completed, and Well 5 is currently being drilled. Also complete are the top-hole sections (30- and 20-inch casing) for all of the remaining seven wells.

Contracts Awarded
In October 2002, the Azeri Development Project awarded the following main construction contracts: (1) McDermott Caspian Contractors, Inc. (MCCI) / SPS Joint Venture for the fabrication of the West and East Azeri platform topsides at the SPS facility in Azerbaijan; (2) the Azfen / Tekfen / AMEC (ATA) Consortium for the fabrication of the Compression and Water Injection Platform (C&WP) topsides at the Kaspmorbourstroy facility in Azerbaijan; (3) Pharmadule Emtunga AB International for the engineering, procurement and fabrication of the West Azeri and East Azeri Living Quarters in Sweden; (4) Bouygues Offshore Construction / SPS Joint Venture for the fabrication of the West and East Azeri platform jackets at the SPS facility in Azerbaijan; (5) KCA Deutag of the UK for the Engineering and Procurement of West and East Azeri Drilling Modules; (6) an extension of the existing contract with McDermott Caspian Contractors for the installation of the 28-inch gas pipeline from the Azeri Field to the Sangachal Terminal; (7) the Azpetrol and Eupec Pipecoatings Joint Venture Alliance for the pipe coating of the 28-inch gas export pipeline at the Black City area of Baku; and (8) Kvaerner Process Systems Canada to provide the gas dewpoint control plant for Sangachal terminal.

Environmental Assessments
Full Environmental and Social Impact Assessments (ESIAs) were conducted for the Baku-Tbilisi-Ceyhan (BTC) pipeline project, followed by a two-month disclosure and consultation period with a wide circle of interested stakeholders, including national and local authorities, NGOs (non-governmental organizations), national and international experts, media and local communities. This process sought feedback from the general public.

The ESIAs were submitted in mid-2002 to government bodies in the three countries (Azerbaijan, Georgia and Turkey) for approval. The documents describe the existing environmental and social conditions along the pipeline route, the design, construction and operation of the lines, the predicted effects of these activities and the measures that will be taken to prevent, minimize and mitigate any potential adverse effects on the ecology and population. The ESIAs for Azerbaijan and Turkey were approved by the respective governments in October and by Georgia on November 30.

The project remains firmly within the original budget of $2.95 billion and is scheduled to begin construction during the first quarter of 2003 simultaneously in all three countries. This schedule provides for the pipeline to be completed in time to enable the start of first oil transportation from the ACG Azeri Project development.

Sangachal Update
Significant progress has been achieved within the Main Construction Works for the Sangachal Terminal. General design work by Kellogg Brown & Root in London and Baku and building design by Tekfen/Azfen in Istanbul continue, construction of the access road is complete and the fire water support system is currently under construction. Ongoing work includes construction of the foundation of the storage tanks, as well as erection of the main process facilities and utilities areas. More than 13,000 local workers are registered in the databases of three BP information / employment centers at Sahil, Sangachal village and the Umid refugee camp. To date, more than 1,000 Azerbaijan nationals have been employed as part of the Main Construction Works.

Tree-Planting Program
The NGO Karvan, which was awarded the BP Biodiversity award, has begun a tree-planting program at Sangachal Terminal to enhance local and regional biodiversity. The program involves the planting of at least 3,400 trees within the terminal land acquisition area. The Azeri Project Sangachal Terminal Expansion program has contributed to this project by supplying manual labor (50 persons) to assist in tree planting. The personnel were recruited from the towns of Umid and Sangachal. To date, 1,200 trees have been planted.

Chess Champions
Azerbaijan's junior chess team, which is sponsored by BP, won three gold medals at the European Championship held in Spain. Two of the gold medalists were brother and sister Shahriyar Mammadyarov, 18, and Turkan Mammadyarova, 14, who come from a family renowned for its prowess at chess. Eltaj Safarli, a 10-year-old student from the Baku Chess School, also came home with a gold medal.

In addition to sponsoring Azerbaijan's participation in the European and World Championships, BP has made computer donations to 10 chess schools and to famous chess players such as Teymur Rajabov and Vugar Hashimov. BP has also supported several chess tournaments in Baku.

Archeological Finds
A team of archeologists sponsored by BP has made a series of remarkable finds along the Azerbaijan section of the BTC pipeline route. Beginning in 2001, as part of a BP initiative, the team began surveying the route on foot, averaging 10-15 km per day. Their painstaking efforts have already enabled them to identify 90 sites of archaeological interest along the pipeline route.

Three of the sites warranted special attention: a burial mound complex discovered in Borsunlu village in the Goranboy District, a group of barrow-type graves at Zayamchay in the Shamkir District and a medieval settlement near the village of Gyrag Kasamanli in the Agstafa District.

The mounds discovered in Borsunlu date back to the end of the 2nd millennium BC and the beginning of the 1st millennium BC. They are now being surveyed by scientists from the Azerbaijan Institute of Archaeology and Ethnography (AIAE). Coffin and burial mound-type graves are characteristic of this region and of the ancient Turkic-Albanian civilization that once dominated the region.
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