BP launches new well that can change Azerbaijan’s oil and gas prospects
Azerbaijan will get a welcome boost to tax revenue from BP's announcement that it has started production at a new $6 billion plant in Azerbaijan's giant Chirag-Gunashli oil field. The upgrade can increase the field's production by up to 25 percent.
Named Azeri-Central-East (ACE), the facility consists of a new production platform 130 kilometers offshore from the Azeri sector of the Caspian Sea. ACE currently boasts a single well drilled to a depth of 3,150 meters, with two more wells to be drilled this year, bringing ACE's daily production to about 24,000 barrels per day, according to BP.
Chirag-Gunashli field.
Production is expected to increase annually and could reach plant capacity of 100,000 barrels per day . Total production over the lifetime of ACE is estimated at 300 million barrels of oil .
“This successful launch is a testament to the ongoing close collaboration between BP, SOCAR (Azerbaijan's state oil company) and the Government of Azerbaijan,” said Gary Jones, BP Regional President for Azerbaijan, Georgia and Turkey. “We are proud to have delivered what we believe to be the 'platform of the future'.”
The seven-member consortium, led by BP, has operated the Azeri-Chirag-Gunashli oil field since the late 1990s. The commissioning of the new ACE facility will help the consortium maintain the field's production levels, after a decade in which production fell by more than 50 percent. Azeri-Chirag-Gunashli's production peaked at 835,000 barrels per day in 2010. But as of March this year, it was pumping just 358,065 barrels per day.
Despite the decline in production, the field remains Azerbaijan's largest oil field, accounting for 59 percent of Azerbaijan's crude production last year.
Like most oil fields, Azeri-Chirag-Gunashli also produces gas, most of which is pumped back into the field to help boost oil production, under the terms of the field's production agreement. The rest belongs to Azerbaijan's state oil company Socar and is pumped ashore, where it is used to supply Azerbaijan's domestic gas market and meet the country's export commitments.
Last year the field supplied Socar with 2 billion cubic meters (bcm) of gas.
BP says the ACE plant has the capacity to handle up to 2.6 billion cubic meters per year, although much lower output is expected this year.
The gas that the new plant will be able to deliver onshore could help Azerbaijan meet its supply commitments, including an agreement with the European Union to double gas exports to Europe to 20 bcm per day. year by 2027 . Although Baku insists it is in line with the pledge, some observers continue to doubt whether gas production can reach promised levels.
For Azerbaijan, the launch of the ACE plant comes at a fortuitous time. Despite efforts to diversify Azerbaijan's economy, the country remains dependent on revenue from hydrocarbon exports. In 2022, oil and natural gas production will account for 47.8% of Azerbaijan's economy and more than 92.5% of export earnings.
In the years leading up to 2022, when Russia launched its invasion of Ukraine, declining oil production posed a serious fiscal challenge for Baku, given relatively low energy prices during that period.
A war-induced price surge filled Baku's coffers. But now that the market has stabilized and prices have fallen as much as 40% from their peak in March 2022, Baku is once again faced with the challenge of maintaining revenue. ACE therefore offers some fiscal respite to Azerbaijani leaders.
Thanks to our Telegram channel you can stay updated on the publication of new Economic Scenarios articles.
The article BP launches a new well that can change Azerbaijan's oil and gas prospects comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/bp-lancia-un-nuovo-pozzo-che-puo-cambiare-le-prospettive-dellazerbaigian-nel-gas-e-petrolio/ on Wed, 08 May 2024 08:00:09 +0000.