TODAY.AZ / Business

ACG sanctions $6 billion Azeri Central East development project [UPDATE]

19 April 2019 [13:00] - TODAY.AZ

By Azernews


By Leman Mammadova

Azeri Central East (ACE) project, the next stage of development of the giant Azeri-Chirag-Guneshli (ACG) field in the Azerbaijani sector of the Caspian Sea, has been sanctioned.

The project sanctioning is the first major investment decision by the ACG partnership since the extension of the ACG production sharing agreement (PSA) to 2049 was agreed in 2017. More than $36 billion has been invested into the development of ACG since the original PSA was signed in 1994.

The project has been sanctioned by the Steering Committee for the development of the Azeri and Chirag fields and the Deep Water portion of the Gunashli (ACG) field (including SOCAR, BP, Chevron, INPEX, Equinor, ExxonMobil, TPAO, ITOCHU and ONGC Videsh).

The $6 billion development includes a new offshore platform and facilities designed to process up to 100,000 barrels of oil per day. The project is expected to achieve first production in 2023 and produce up to 300 million barrels over its lifetime.

Speaking at the ceremony of signing the contract on the approval of the ACE project, Rovnaq Abdullayev, president of SOCAR (State Oil Company of Azerbaijan), said that the sanctioning marks yet another important milestone in the development of ACG for the benefit of the nation, which began 25 years ago with the signing of the Contract of the Century.

 “For decades, SOCAR has been reinvesting Azerbaijan’s oil revenues in the development of a highly qualified workforce and modern industrial facilities in our country. Today we have world-class factories, production and installation complexes, marine vessels and highly-skilled local workforce, which have created opportunity for construction and installation of ACE platform by the Azerbaijani specialists throughout the country. Looking forward, we expect more than 3 billion barrels of additional oil production from ACG. This strategic decision supports Azerbaijan’s increasing role as an energy supplier for the regional and global markets,” he added.

BP Chief Executive Bob Dudley said for his part that working together over the past 25 years, this remarkable partnership has turned these world-class assets into tremendous benefits for the people of Azerbaijan. “The ACE extension builds on that legacy and helps ensure that the next quarter century will be just as bright,” he said.

“Today’s announcement supports the long-term production plans we set for ACG when we extended the PSA. It demonstrates our commitment to work with SOCAR and Azerbaijan’s Government to continue to unlock ACG’s resources more efficiently and competitively,” said Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey.

Later, Rovnag Abdullayev told reporters that SOCAR and partners on the project for the development of the ACG block of fields plan to participate in a tender to buy a stake of ExxonMobil and Chevron.

Earlier, ExxonMobil and Chevron announced that they were planning to sell their shares in the ACG.

ACE project is centred on a new 48-slot production, drilling and quarters platform located mid-way between the existing Central Azeri and East Azeri platforms in a water depth of approximately 140 meters. The project will also include new infield pipelines to transfer oil and gas from the ACE platform to the existing ACG Phase 2 oil and gas export pipelines for transportation to the onshore Sangachal Terminal.

In addition, there will be a water injection pipeline installed between the East Azeri and ACE platforms to supply injection water from the Central Azeri compression and water injection platform to the ACE facilities.

Construction activities, which will commence this year and run through mid-2022, will take place in-country utilizing local resources. It is expected that at peak, construction activities will create up to 8,000 jobs.

ACG is the largest oil and gas field in the Caspian Sea, covering more than 432 square kilometers.

Proven oil reserves of ACG block of oil and gas fields are estimated at 1.2 billion tons, while gas reserves make 350 billion cubic meters.

The ACG participating interests are as follows: BP - 30.37 percent; AzACG (SOCAR) - 25 percent; Chevron - 9.57 percent; INPEX - 9.31 percent; Statoil - 7.27 percent; ExxonMobil - 6.79 percent; TPAO - 5.73 percent; ITOCHU - 3.65 percent; ONGC Videsh Limited (OVL) - 2.31 percent.








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