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Azeri–Chirag–Gunashli

Coordinates: 40°1′4″N 51°15′58″E / 40.01778°N 51.26611°E / 40.01778; 51.26611
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Azeri–Chirag–Gunashli
Azeri–Chirag–Gunashli is located in Caspian Sea
Azeri–Chirag–Gunashli
Location of Azeri–Chirag–Gunashli
CountryAzerbaijan
RegionCaspian Sea
Offshore/onshoreOffshore
Coordinates40°1′4″N 51°15′58″E / 40.01778°N 51.26611°E / 40.01778; 51.26611
OperatorAIOC
PartnersBP, SOCAR, MOL Plc., Inpex, ExxonMobil, TPAO, Itochu, ONGC Videsh
Field history
Discovery1985
Start of production1997
Peak year2010
Production
Current production of oil339,000 barrels per day (~1.69×10^7 t/a)
Year of current production of oil2024
Current production of gas10×10^6 m3/d (350×10^6 cu ft/d)
Peak of production (oil)885,000 barrels per day (~4.41×10^7 t/a)
Estimated oil in place5,000 million barrels (~6.8×10^8 t)

Azeri–Chirag–Gunashli (ACG, Azerbaijani: Azəri-Çıraq-Günəşli) or Azeri–Chirag–Deepwater Gunashli is a complex of oil fields in the Caspian Sea, about 120 kilometres (75 mi) off the coast of Azerbaijan. It consists of the Azeri and Chirag oil fields, and the deepwater portion of the Gunashli oil field. An overall estimate of the area of the development is 432.4 square kilometres (167.0 sq mi).[1] It is developed by the Azerbaijan International Operating Company, a consortium of international oil companies, and operated by BP on behalf of the consortium. The ACG fields have estimated recoverable reserves of about 5 to 6 billion barrels (790 to 950 million cubic metres) of petroleum. Peak oil production of 885,000 barrels per day (140,700 m3/d) was reached in 2010. However by the first quarter of 2024 production had fallen to 339,000 barrels per day (53,900 m3/d), or approximately one-third of peak value, as the development continued terminal decline.[2] As of 2021, ACG oil accounted for 95% of all Azerbaijani oil exports.[3]

BP reports that crude oil from ACG is exported through the Baku–Tbilisi–Ceyhan pipeline to the Mediterranean Sea and the Baku-Supsa Pipeline to Supsa in Georgia, as well as through the Baku-Novorossiysk Pipeline to Novorossiysk in Russia. It is believed that there may also be untapped natural gas reserves under the ACG oilfields.[4] Media reports indicate that according to American Consulting Association IHS CERA (Cambridge Energy Research Associates), the Azeri–Chirag–Gunashli is the third-largest oil-field development out of 20 listed. Total investment was estimated at US$20 billion as of 2009.[5] As of 2008 reports, oil from the ACG fields accounted for approximately 80% of Azerbaijan's total oil production (exports and domestic consumption)[6] and was expected to bring Azerbaijan potentially $80 billion in profits.[7]

History

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Exploitation of the Azeri–Chirag–Gunashli development started at the beginning of 1990s. In January 1991, the Azerbaijani government announced separate international tenders of exploration rights for Azeri, Chirag, and Gunashli fields. In June 1991, a consortium of Amoco, Unocal, British Petroleum, Statoil, McDermott, and Ramco was formed for a development of Azeri field. Azerbaijan was represented in the consortium by SOCAR. Negotiations were expanded to include all three fields. After Heydar Aliyev became President of Azerbaijan in 1993, talks with foreign companies were stopped and Lukoil was invited to the consortium. Negotiations resumed in 1994.[8] The production sharing agreement (PSA) was signed by the parties on 20 September 1994 for development of the fields for 30 years.[9][10][11][12] The day of the signing of PSA agreement is celebrated as The Day of Oilworkers in Azerbaijan.[1]

At the first stage, the consortium started development drilling of the Chirag field in August 1997. First oil was produced in November 1997.[12] This development stage was also known as the Early Oil Project (EOP). Originally, produced oil was exported through the Baku–Novorossiysk pipeline. A contract on the oil transportation via Russia to the Black Sea port of Novorossiysk was signed on 18 February 1996. The oil transportation through the pipeline started on 25 October 1997.[13] For the diversification of the export routes, construction of the Baku–Supsa Pipeline was agreed in 1996.[13] The pipeline became operational in 1998 and was officially inaugurated in 1999.[12] At the Chirag field, the water injection project was implemented in 1999 and the drilling technology was upgraded in 2000.[12]

The second stage of the development consisted of the development of the Azeri field. The development of Azeri field started in 2002. Central Azeri living quarters arrived in Baku in July 2003 and drilling modules arrived in Baku in July 2003. The Central Azeri jacket was completed in March 2004. To accommodate addition oil, the Sangachal Terminal was upgraded in March 2003. After installing the Central Azeri gas pipeline, the Central Azeri platform was launched in July 2004. The platform was installed by October 2004, and production started in February 2005. The Central Azeri compression and water injection platform topsides was launched in July 2005. It injected first gas in May 2006[12]

The West Azeri drilling modules arrived in Baku in August 2004 and the platform launched in May 2005. The platform's topsides was installed in September 2005 and production started in January 2006.[12] East Azeri drilling modules and quarters arrived in Baku in June 2005 and the platform was launched in March 2006. The topside was installed in March 2006 and the production began in October 2006.[12]

The Deepwater Gunashli pre-drilling program started in December 2005. Drilling modules and quarters arrived in Baku in June 2006.[12] The platform became operational in April 2008.[14]

On September 14, 2017, The Azerbaijan Government and the State Oil Company of the Republic of Azerbaijan (SOCAR), together with BP, Chevron, INPEX, Statoil, ExxonMobil, TP, ITOCHU and ONGC Videsh have signed an agreement to extend the PSA for ACG fields until 2049.[15]

On April 19, 2019, SOCAR president Rovnag Abdullayev and BP’s regional president for Azerbaijan, Georgia, and Turkey, Garry Johns signed a contract cost $6 billion. The final investment decision on the Azeri Central East (ACE) platform, which is planned to be built on the Azeri–Chirag–Gunashli (ACG) block, has been adopted at the signing ceremony. The construction is scheduled to start in 2019, and the completion is scheduled for mid-2022.[16][17][18][19]

In the first quarter of 2024 production was 339,000 barrels per day (53,900 m3/d), approximately one-third of peak value.[2]

Ownership

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The founding consortium formed to develop the Azeri–Chirag–Gunashli project initially included BP, Amoco, Unocal, Statoil, McDermott, Turkish Petroleum, and Ramco Energy.[20]

Lukoil sold its share in the project in 2003 to Inpex for $1.354 billion.[21]

On 23 November 2009, Devon Energy announced it would sell its share in ACG.[22] On 29 March 2013, Hess sold its stake to ONGC for $1 billion.[23]

In April 2020, Chevron sold all of its interest in Azeri–Chirag–Gunashli, including interests in the Western Export Route Pipeline and the Baku-Tbilisi-Ceyhan oil pipeline, to MOL Hungarian Oil and Gas PLC.[24]

In 2018, and again in May 2020, ExxonMobil unsuccessfully put its stake in Azeri–Chirag–Gunashli up for sale.[25]

In 2023, Norway's Equinor divested all of its assets in Azerbaijan, including its stakes in the Azeri–Chirag–Gunashli development and the Baku-Tbilisi-Ceyhan oil pipeline.[26] Equinor reported a loss from the transaction in the range of $300 million to $400 million, recorded in 2024.[27] Of Equinor's original 7.27% interest in ACG, 6.655% reverted to SOCAR, the State Oil Company of the Republic of Azerbaijan, and 0.615% to ONGCVidesh.

As of the first quarter of 2024, the remaining participating shareholders of the Azeri–Chirag–Gunashli development were BP with a 30.37% stake, SOCAR (31.66%), MOL (9.57%), INPEX (9.31%), ExxonMobil (6.79%), TPAO (5.73%), Itochu (3.65%) and ONGCVidesh (2.93%). BP also leads the AIOC consortium.[2]

Under a 2017 agreement to extend the production sharing to 2049, the interest of SOCAR, the Azeri state energy company, increased to 25% while the interests of the other shareholders were reduced.[28]

Production

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Azeri-Chirag-Gunashli complex projected production profile, with contributions of individual reservoirs delineated, per U.S. Energy Information Administration and BP.[29][30]

With 3 stages completed and 7 operational platforms functional, total production from Azeri–Chirag–Gunashli was more than 1 million barrels (160,000 m3) a day in 2009.[10] During the first three quarters of 2009, over 224 million barrels (35.6×10^6 m3) of oil were produced from the Chirag, Central Azeri, West Azeri, East Azeri and Deep Water Gunashli platforms. As per BP's report, Chirag had 19 wells in operation (13 of which are oil producers and 6 - water injectors) with an overall production of 105,300 bbl/d (16,740 m3/d). Central Azeri (CA) had 18 wells (13 of which are oil producers and 5 - gas injectors) with production of 185,800 bbl/d (29,540 m3/d). West Azeri (WA) had 18 wells in operation (14 of which are oil producers and 4 - water injectors with production of 275,200 barrels per day (43,750 m3/d). East Azeri (EA) had 13 wells in operation (9 of which are oil producers and 4 - water injectors) with an overall production 139,400 barrels per day (22,160 m3/d) for the first three quarters of 2009. Deep Water Gunashli (DWG) had 17 wells (9 oil producers and 8 water injectors) in operation with production of 116,400 barrels per day (18,510 m3/d) of oil.[31]

Oil depletion rates of each of the Azeri–Chirag–Gunashli reservoirs are expected to differ over time, with aggregate output from the complex declining substantially after 2018.[30][29][32]

Azerbaijan also gets approximately 10–11 million cubic metres (350–390 million cubic feet) of casing head gas per day extracted from ACG block. The gas is supplied by BP free of charge. Azerbaijan received over 1 billion cubic meters of gas from these fields in the 1st quarter of 2009. Current recovery comes to nearly 27 million cubic meters of casing head gas a day. A portion of gas is routed to national gas transportation system of Azerbaijan. Some is used as source of fuel at the platforms.

Casing head gas from platforms in central, western and eastern parts of Azeri field is supplied to Sangachal Terminal via 28 inch subsea gas pipeline to distributive system of Azerigaz CJSC to use on the local market. A portion of casing head gas extracted at Chirag platform is directed to SOCAR's compressor station (the State Oil Company of Azerbaijan) to Oil Rocks field via 16 inch subsea gas pipeline. The rest of the gas from Azeri–Chirag–Guneshli platforms are pumped through intra field subsea gas pipeline to a platform for repeated pumping in a layer to support layer pressure.[33] As of September 2009, 164.2 million tonnes of oil and 37 billion cubic meters of associated gas have been produced and 80.3 million cubic meters of water and 13 billion cubic meters of gas have been injected into layers since the beginning of production in ACG fields in 1997.[34]

The total production rate of the ACG complex as of the first quarter of 2024 was 339,000 barrels per day (53,900 m3/d), having substantially declined from the peak output in 2010 of 835,000 barrels per day (132,800 m3/d).[2]

In 2024, the State Oil Fund of Republic of Azerbaijan (SOFAZ) revenue was US$ 5,725 billion from the sale of oil from the Azeri-Chirag-Gunashli (ACG) field.[35]

Routes of transportation

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The oil from the ACG complex was pumped to Sangachal terminal south of Baku and from there routed to foreign markets by Baku-Supsa pipeline, Baku–Novorossiysk pipeline and Baku–Tbilisi–Ceyhan pipeline.[10] An interactive map shows all current export routes.

See also

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References

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  1. ^ a b SOCAR website Azeri–Chirag–Guneshli Archived October 16, 2009, at the Wayback Machine
  2. ^ a b c d "BP Azerbaijan First Quarter 2024 Results". May 10, 2024. Retrieved September 7, 2024.
  3. ^ Cavcic, Melisa (2022-01-03). "Azerbaijan's oil output drops down considerably from 2020 figures". Offshore Energy. Archived from the original on 2022-01-26. Retrieved 2022-07-20.
  4. ^ Vladimir Socor (2007-05-09). "Caspian gas plentiful now for Nabucco pipeline project". Eurasia Daily Monitor. Vol. 4, no. 92. The Jamestown Foundation. Archived from the original on 2010-06-21. Retrieved 2009-11-25.
  5. ^ A.Badalova (2009-08-18). "Azerbaijani oil field third in IHS CERA ranking of world's 20 largest oil fields". Trend News Agency. Archived from the original on 2009-08-21. Retrieved 2009-11-24.
  6. ^ "U.S. Energy Information Administration (EIA)". www.eia.gov. Archived from the original on November 14, 2007.
  7. ^ Akiner, Shirin (2004). The Caspian: politics, energy and security. RoutledgeCurzon. p. 129.
  8. ^ Croissant, Michael P.; Aras, Bülent (1999). Oil and Geopolitics in the Caspian Sea Region. Greenwood Publishing Group. pp. 104–109. ISBN 9780275963958.
  9. ^ "Azeri-Chirag-Gunashli Oilfield - Offshore Technology | Oil and Gas News and Market Analysis". www.offshore-technology.com. Archived from the original on 2021-10-07. Retrieved 2021-10-07.
  10. ^ a b c Tarel Gusep. Translated by Theresa Murphy (2006-01-13). "West Azeri platform of the Azeri-Chirag-Guneshli offshore oilfield commences oil extraction". Caucaz europenews. Archived from the original on 2008-09-03. Retrieved 2009-11-24.
  11. ^ "BP reports over 1 bn barrel of oil production in Azeri-Chirag-Guneshli field". Vol. 14, no. 8. Alexander's Gas and Oil Connections. 2009-04-15. Retrieved 2009-11-24.
  12. ^ a b c d e f g h "History of Azeri-Chirag-Gunashli (ACG) Project - Baku (1994-2006)". Azerbaijan International. September 2006. Archived from the original on 2010-02-02. Retrieved 2009-11-25.
  13. ^ a b "Transport routes of Azerbaijani oil (Baku-Novorossiysk, Baku-Supsa)". Azerbaijan Portal. Archived from the original on 2009-02-19. Retrieved 2008-06-08.
  14. ^ "BP website. The largest oil field under development in the Azerbaijan sector of the Caspian basin". Archived from the original on 2012-06-14. Retrieved 2009-11-30.
  15. ^ "The Azerbaijan Government and co-venturers sign amended and restated Azeri-Chirag-Deepwater Gunashli PSA". Archived from the original on 8 October 2017. Retrieved 8 October 2017.
  16. ^ "BP, SOCAR Sign Deal to Build New Azeri Oil Exploration Platform". The New York Times. Reuters. 2019-04-19. ISSN 0362-4331. Archived from the original on 2019-04-23. Retrieved 2019-04-24.
  17. ^ "BP, SOCAR sign deal to build new Azeri oil exploration platform". Reuters. 2019-04-19. Archived from the original on 2019-04-23. Retrieved 2019-04-24.
  18. ^ Foy, Henry; Raval, Anjli (19 April 2019). "BP leads $6bn of fresh investment in Azeri oil project". Financial Times. Archived from the original on 2019-04-20. Retrieved 2019-04-24.
  19. ^ "BP and SOCAR sign new Azeri oil deal". Arab News. 2019-04-19. Archived from the original on 2019-04-23. Retrieved 2019-04-24.
  20. ^ "An Oil Deal by Azerbaijan". The New York Times. Reuters. 1994-09-20. ISSN 0362-4331. Retrieved 2022-07-20.
  21. ^ "Lukoil completes sale of its interest in the Azeri-Chirag-Gunashli project to Inpex" (Press release). Lukoil. 2003-04-28. Archived from the original on 2010-01-06. Retrieved 2009-12-08.
  22. ^ A.Badalova (2009-11-23). "U.S. company sells its stake in largest oil project in Azerbaijan". Trend News Agency. Archived from the original on 2009-11-26. Retrieved 2009-11-30.
  23. ^ Johnson, Luke (2013-03-29). "Hess completes sale of Azeri oilfield stake to ONGC Videsh". Upstream Online. NHST Media Group. Archived from the original on 2013-04-02. Retrieved 2012-09-08.
  24. ^ "Chevron sells Azerbaijan assets to MOL Hungarian Oil and Gas — Chevron.com". 2022-07-20. Archived from the original on 2022-07-20. Retrieved 2022-07-20.
  25. ^ "U.S. Energy Giant ExxonMobil Puts Stake In Azerbaijani Oil Field Up For Sale". RadioFreeEurope/RadioLiberty. Archived from the original on 2021-08-27. Retrieved 2022-07-20.
  26. ^ "Equinor sells its interests in Azerbaijan". www.equinor.com. 2023-12-22. Retrieved 2024-09-07.
  27. ^ "Equinor sells Azerbaijan assets, eyes loss of up to $400 million". Yahoo Finance. 2023-12-22. Retrieved 2024-09-07.
  28. ^ Bagirova, Nailia; Bousso, Ron (14 September 2017). "BP-led group extends Azeri oil "contract of the century"". Reuters. Archived from the original on 14 September 2017. Retrieved 14 September 2017.
  29. ^ a b "International - U.S. Energy Information Administration (EIA)". www.eia.gov. Archived from the original on 2022-06-02. Retrieved 2022-07-20.
  30. ^ a b Howie, John M.; Robinson, Nigel; Riviere, Martin; Lyon, Thomas; Manley, Dominic (2005-09-01). "Developing the long-term seismic strategy for Azeri-Chirag-Gunashli, South Caspian Sea, Azerbaijan" (PDF). The Leading Edge. 24 (9): 934–939. doi:10.1190/1.2056406. ISSN 1070-485X. Archived from the original on 2022-07-20.
  31. ^ "BP Azerbaijan 3Q 2009 Business Update". Archived from the original on November 23, 2010.
  32. ^ Azeri Chirag Gunashli Full Field Development Environmental and Socio-Eeconomic Impact Assessment (PDF). BP. 2007. pp. 5–2. Archived from the original (PDF) on 2022-07-20.
  33. ^ "Azerbaijan willing to get more casing head gas from Azeri-Chirag-Guneshli fields". Public Finance Monitoring Center. 2009-05-05. Archived from the original on 2011-07-06. Retrieved 2009-11-25.
  34. ^ "Recoverable reserves at Azerbaijan's Azeri-Chirag-Gunashli fields estimated at nearly 1 billion tons". Today.az. 2009-09-02. Archived from the original on 2009-09-07. Retrieved 2009-12-09.
  35. ^ "Azerbaijan unveils revenues from Azeri-Chirag-Gunashli, Shah Deniz fields | Caliber.Az". caliber.az. 2024-12-09. Retrieved 2024-12-09.
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