BP stabilizes Azeri oil output with new platform, boosts third-country BTC flows

BP increased oil output at Azerbaijan's flagship Azerbaijan-Chirag-Gunashli complex by 1% year on year in the fourth quarter 2024 to 351,000 b/d thanks to the new Azeri Central East platform that came on stream in April. It also boosted oil flows from other Caspian countries through the BTC pipeline by around 5% for the full year, a Feb. 13 statement showed.

A breakdown of quarterly numbers from the UK major showed ACG oil output rose by 4% between the first and fourth quarters of 2024 as a succession of wells started up at the new Azeri Central East platform; the ACE platform was producing 26,000 b/d by the end of the year, slightly above an initial BP forecast, with three wells on stream at the platform, BP said. The startup marked the first new platform to come on stream at the ACG complex since 2014, with BP describing the platform as its most technologically advanced worldwide.

Loadings of the country's flagship Azeri Light grade dispatched via the Baku-Tbilisi-Ceyhan pipeline to the Mediterranean dipped by 2% on an annual basis in 2024 to 609,000 b/d, BP said.

On top of the ACG crude shipped as Azeri Light, another 96,000 b/d was condensate from the Shah Deniz gas complex; unchanged on the year. All Shah Deniz condensate volumes are being exported via BTC, a BP spokesperson confirmed.

In addition, around 28% of flows through the pipeline in 2024 -- some 170,000 b/d -- were not derived from either the ACG complex or Shah Deniz and thus derived largely from Kazakhstan or Turkmenistan.

Azeri Light is typically a high-value grade, favored in the production of middle distillate fuels and light products such as jet fuel and diesel. A decline at ACG — prior to the ACE startup — had raised the possibility of a long-term change in Azeri Light quality as the share of Shah Deniz condensate increased.

Azerbaijan also used a second pipeline to the Black Sea port of Supsa for a significant share of oil exports before Russia's full-scale invasion of Ukraine in 2022, however, those volumes have dwindled due to naval action in the area, and were minimal in 2024, the BP statement showed.

The grade was assessed by Platts -- part of S&P Global Commodity Insights -- at a $1.77/b premium to Dated Brent on Feb. 12.

BP strategy

Azerbaijan looks set to remain a key part of BP's worldwide hydrocarbon production as the major comes under investor pressure to rein in renewables spending -- although the UK major also has renewables projects in Azerbaijan. The company increased its worldwide oil output by 2% year-on-year in Q4 to 1.15 million b/d, with CEO Murray Auchincloss highlighting the contribution from Azerbaijan. BP holds a 30.37% stake in ACG, a 29.99% stake in Shah Deniz, and a 30.1% stake in BTC.

In its Azerbaijan update, BP said it would start supplementing existing gas output from Shah Deniz with flows from deep, non-associated gas reserves found below the ACG complex, starting in late-2025. While assessment of the deep gas resources continues, they are believed to be "significant, with up to 4 Tcf in place," it said.

Following the signing of an addendum to the ACG production sharing contract, the ACG partners "are now planning the next steps... An initial well is being drilled to produce gas from two priority reservoirs. The well is important as it will also deliver appraisal through production, which is expected to underpin future development plans," BP said.