BP In Azerbaijan's Caspian Sea, Major Catalysts In The Works Energy
BP In Azerbaijan's Caspian Sea, Major Catalysts In The Works
BP plc's Shah Deniz 2 project remains on track for a 2018 start-up, with the South Caucus Pipeline expansion progressing smoothly.
Several exploration endeavors in the Caspian Sea are worth monitoring, as the upside could yield another massive find with billions of BOE in recoverable hydrocarbons.
Considering its growing geopolitical importance, it is surprising Azerbaijan gets very little attention in the financial media.
BP plc's Azerbaijan operations offer shareholders plenty of upside.
Azerbaijan is a small nation bordering the Caspian Sea in the Caucus region, which has seen its oil & gas production skyrocket upwards since it gained its independence through the breakup of the USSR. The Azeri-Chirag-Deepwater Gunashli venture is operated by BP plc (NYSE:BP) through a production sharing agreement, and BP owns 35.8% of the consortium. BP plc is also the operator of the massive Shah Deniz natural gas and condensate field with a 28.8% stake in the development, also through a PSA. Both fields are located in the Caspian Sea.
During the first half of 2016, production at the ACG venture averaged 655,000 barrels of oil per day while the Shah Deniz field pumped out 5.4 billion cubic meters of natural gas and 10 million barrels of condensate, equal to just over 1 billion cubic feet of natural gas and just under 55,000 barrels of condensate in daily output. That makes Azerbaijan a key part of BP's upstream operations, an area of operation that is set to become a lot larger in the coming years.
The massive Shah Deniz 2 development is on track to start-up by 2018, which will see production ramp up through 2020 and beyond as different parts of the venture are brought online. At its peak, the Shah Deniz 2 has the capacity to produce a peak gross rate of 370,000 BOE/d. 77% of the upstream side of the project has been completed as of the end of June 2016.
What the Shah Deniz 2 project aims to do is add 16 billion cubic meters, or 565 billion cubic feet, of annual natural gas production along with the capacity to pump out an additional 105,000 bpd of condensate to the Shah Deniz field. That is on top of existing production.