Crude oil production at the BP-operated Azeri-Chirag-Guneshli fieldcomplex offshore Azerbaijan has stabilized at 660,000 b/d, a senior BPofficial said Wednesday.
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Gordon Birrell, BP's regional president for Azerbaijan, Georgia andTurkey, stressed at a conference in Baku the importance of continuedinvestment and the application of the most advanced technology in stabilizingoutput at the giant field.
BP is now effectively in the business of managing decline at ACG, with acurrent program aimed at stabilizing production at around 650,000-700,000 b/dfollowing peak output of around 800,000 b/d in 2009 and an anticipated fallto around 500,000 b/d in 2023, he said.
"We continue production at ACG at an approximately flat level since thebeginning of the year...[at around] 660,000 b/d," Birrell said.
Birrell described ACG as a world-class reservoir and stressed that BPand its partners were committed to extending the life of the fields for aslong as possible.
"We believe ACG can go on for decades as a benefit to Azerbaijan,"Birrell said.
He said that current output was running at 660,000 b/d, much the samelevel as in 2012, and that while there might be some dips ahead, the trendfor the next several years would be one of stabilization.
A graph displayed by Birrell showed ACG was expected to see currentoutput rise gently to around 700,000 b/d in 2015, to dip slightly in 2016,and then to recover to around 700,000 in 2017 before tailing off gradually toaround 500,000 b/d in 2023.
In contrast, the World Bank's latest study on Azerbaijan, based onassessments which appear to have been gathered between 2010 and 2012,anticipated that total Azerbaijani oil production would rise steadily over afour-year period from 2012 onward, peaking at 65.7 million mt/year (around1.28 million b/d) in 2016 before falling to 35.8 million mt in 2024.
This is the year when the 30-year production sharing agreement underwhich BP operates the giant field expires.
ACG routinely accounts for around 80% of Azerbaijan's total oilproduction.
When asked by Platts on Tuesday whether the 1994 production sharingagreement -- which the Azerbaijanis dub "The Contract of the Century" --might be extended, Birrell replied: "I would hope so. We would love to bepart of operations at ACG for many more years to come. But you will have toask the government about that."
So far, Birrell told the conference, BP and its partners had produced2.2 billion barrels of oil from ACG.
BP has commonly cited the field as possessing some 5.4 billion barrelsof reserves considered recoverable in the current 30-year PSA timeframe, withfurther resources available for subsequent production.
A senior source at Azerbaijan's state-owned oil company Socar toldPlatts that so far only one-third of the field's recoverable reserves hadbeen produced.
"The objective now is to stop the decline, to get [production] back to astable or rising level again," the Socar source said.
"We have now managed to stabilize production at a sustainable level,"the source added.
"There's been an enormous amount of effort by all parties to addressevery issue both individually and holistically. That's what BP is now doing."
Birrell told Platts that he viewed ACG as "a good oil field, right nowin its declining phase."
However, he stressed: "We should be able to flatten out the decline fora number of years."
The precise level of plateau production, foreseen by BP as extendingroughly from 2012 to 2018, Birrell told Platts, "will depend on how much weinvest."
At the conference, Birrell emphasized that BP was indeed committed tofurther investments, citing in particular the new drilling platform currentlybeing installed in the center of the field as the centerpiece of the $6billion Chirag Oil Project.
Like all Azerbaijani projects, ACG's operations have been hampered bylack of rigs for drilling wells.
With wells often producing at between 10,000 and 20,000 b/d each, theinability to drill as many wells as anticipated, as well as the need formaintenance of existing facilities, has contributed to the downturn inproduction in recent years.
The issue threatened a major disruption in relations between BP and theAzerbaijani authorities, although this seems to have been smoothed over whenBP President Robert Dudley visited Baku for talks with Azerbaijani presidentIlham Aliev and the most senior government and Socar leadership.
Opening the annual Oil and Gas Exhibition in Baku yesterday, PresidentAliev spoke warmly of BP saying: "In the last 20 years we have created anexcellent relationship. For 20 years it has been our strategic partner and wehave attained great successes -- and for at least 20 years to come thisstrategic partnership will continue."