BP 2015 Annual Report Download - page 228

• In 2012 further EU and US regulations concerning restrictive measures
against Iran were issued. The Shah Deniz joint operation and its gas
marketing and pipeline entities, in which Naftiran Intertrade Co Ltd
(NICO) has an interest, were excluded from the main operative
provisions of the EU regulations, and from the application of the new
US sanctions, as they fall within the exception for certain natural gas
projects under Section 603 of the US Iran Threat Reduction and Syria
Human Rights Act of 2012. The Shah Deniz Stage 2 project is also
excluded from the EU and US sanctions. For further information see
International trade sanctions on page 242.
• In April we received final ratification by the government of Azerbaijan
on the new PSA with the State Oil Company of the Republic of
Azerbaijan, signed in December 2014, to jointly explore for and develop
potential prospects in the shallow water area around the Absheron
peninsula.
• The Shah Deniz Stage 2 project continues to move ahead with a
number of milestones achieved ahead of schedule. The Shah Deniz
Stage 2 project is now more than 50% complete in terms of
engineering, procurement and construction, and remains on target for
first gas in 2018.
BP holds a 30.1% interest in and operates the Baku-Tbilisi-Ceyhan (BTC)
oil pipeline. The 1,768 kilometre pipeline transports oil from the BP-
operated ACG oilfield and gas condensate from the Shah Deniz gas field
in the Caspian Sea, along with other third-party oil, to the eastern
Mediterranean port of Ceyhan. The BTC pipeline has a capacity of
1mmboe/d with average throughput in 2015 of 716.7mboe/d.
BP is technical operator of, and currently holds a 28.83% interest in, the
693 kilometre South Caucasus Pipeline (SCP). The pipeline takes gas from
Azerbaijan through Georgia to the Turkish border and has a capacity of
134mboe/d with average throughput in 2015 of 113.2mboe/d. BP (as
operator of Azerbaijan International Operating Company) also operates the
Western Export Route Pipeline that transports ACG oil to Supsa on the
Black Sea coast of Georgia, with average throughput of 86mboe/d in 2015.
In April BP became a shareholder in the Trans Anatolian Natural Gas
Pipeline (TANAP), and now holds a 12% equity share in the project.
TANAP is a central part of the Southern Corridor pipeline system that will
transport gas from the Shah Deniz field in Azerbaijan to markets in
Turkey, Greece, Bulgaria and Italy.
In Oman, BP is continuing with development activity on the BP-operated
Khazzan field in block 61 (BP 60%).
• By the end of 2015 10 rigs were operational, drilling the development
wells at Khazzan. The project is more than 40% complete and work
continues on the central processing facility and the associated
infrastructure. Gas production is expected to start in late 2017.
• In February 2016 BP announced it had signed a heads of agreement
with the government of the Sultanate of Oman to amend the block 61
EPSA, extending the licence area of the block and enabling further
development of the Khazzan field.
In Abu Dhabi, we have an equity interest of 14.67% in an offshore
concession. We also have a 10% equity shareholding in the Abu Dhabi
Gas Liquefaction Company that supplied 5.7 million tonnes of LNG
(295.7bcfe regasified) in 2015.
In India, we have a 30% interest in four oil and gas PSAs operated by
Reliance Industries Limited (RIL), and partner with RIL in a 50:50 joint
operation for the gas sourcing and marketing in India.
• In 2015 a number of activities to sustain production and extend the life
of the producing fields in KG D6 block were completed. These included
well side-tracks, the installation of additional onshore compression,
reactivation of shut-in wells and production optimization.
• We also undertook successful tests of three earlier discoveries; two in
the KG D6 block and one in the NEC 25 block to progress towards
Declaration of Commerciality.
• We continue to expect further clarity on the gas price policy to emerge
in due course.
In Iraq, BP holds a 47.6% working interest and is the lead contractor in
the Rumaila technical service contract in Southern Iraq. Rumaila is one of
the world’s largest oil fields, comprising five producing reservoirs. BP’s
total assets in Iraq at 31 December 2015 were $1,707 million
($1,281 million current and $426 million non-current). BP has undertaken
studies with the government of Iraq and North Oil Company in support of
the stabilization and redevelopment of two producing reservoirs in the
Kirkuk field. Access to the Kirkuk field in 2015 was restricted due to the
security situation and the term of the agreement expired at the end of
2015. BP is entitled to recover all costs incurred to that date. Despite
instability and sectarian violence in the north and west of the country, BP
operations continued as planned in the south.
In Russia, we acquired a 20% participatory interest in a Rosneft
subsidiary, Taas-Yuryakh Neftegazodobycha, in 2015, that will further
develop the Srednebotuobinskoye oil and gas condensate field in East
Siberia. Related to this, Rosneft and BP will jointly undertake exploration
in an adjacent area of mutual interest.
Rosneft and BP have also agreed to jointly explore two additional areas of
mutual interest in the prolific West Siberian and Yenisey-Khatanga basins
where they will jointly appraise the Baikalovskoye discovery subject to
receipt of all relevant consents. This is in addition to the exploration
agreement announced in 2014 for an area of mutual interest in the Volga-
Urals region of Russia where Rosneft and BP have commenced joint
study work to assess potential non-shale, unconventional tight-oil*
exploration projects (see Rosneft on page 38).
Australasia
We are active in Australia and Eastern Indonesia.
In Australia BP is one of seven participants in the North West Shelf
(NWS) venture, which has been producing LNG, pipeline gas,
condensate, LPG and oil since the 1980s. Six partners (including BP) hold
an equal 16.67% interest in the gas infrastructure and an equal 15.78%
interest in the gas and condensate reserves, with a seventh partner
owning the remaining 5.32%. BP also has a 16.67% interest in some of
the NWS oil reserves and related infrastructure. The NWS venture is
currently the principal supplier to the domestic market in Western
Australia and one of the largest LNG export projects in the region, with
five LNG trains in operation. BP’s net share of the capacity of NWS LNG
trains 1-5 is 2.7 million tonnes of LNG per annum.
BP also holds a 5.375% interest in the Jansz-lo field and 12.5% interests
in the Geryon, Orthrus, Maenad, Urania and Eurytion fields which are part
of the Greater Gorgon project. BP’s Jansz-Io interest is in the reserves
and wells which will provide the initial feed gas to the Gorgon LNG plant,
scheduled to commence production in early 2016.
BP holds a 70% interest in four deepwater offshore exploration blocks in
the Ceduna Sub Basin in the Great Australian Bight off the coast of
southern Australia. BP, as operator, expects drilling to commence in late
2016 in this frontier exploration basin. It is also one of five participants in
the Browse LNG venture (operated by Woodside) and holds a 17%
interest.
• The Browse joint operation partners agreed to enter FEED for an
offshore floating LNG concept in June. The proposed development
remains subject to regulatory, joint venture and internal BP approvals.
• In October the Western Flank A project (BP 16.67%) in offshore
Western Australia began production. The Western Flank A project is
the first of a series of subsea tie-back projects that have been
undertaken to extend the production plateau and supply additional gas
to the NWS’s five existing LNG trains and domestic gas plant. The
project is operated by Woodside.
• The Persephone project (BP 16.67%) is the second of the NWS series
of subsea tie-back projects and is on schedule to deliver first gas in the
second half of 2017.
In Eastern Indonesia, BP operates the Tangguh LNG plant. Tangguh
(BP 37.16%), is located in Papua Barat. The asset comprises 14 producing
wells, two offshore platforms, two pipelines and an LNG plant with two
production trains. It has a total capacity of 7.6 million tonnes of LNG per
annum. Tangguh supplies LNG to customers in Indonesia, China, South
Korea, Mexico and Japan through a combination of long, medium and
short-term contracts. Plans for a third train, the Tangguh expansion project,
remain on track, with first production expected in 2020.
• The Tangguh expansion project is progressing, with completion of dual
onshore FEED to two separate consortia on the third LNG train during
2015. Marketing on the third train capacity continues, with 65% of the
volumes already contracted.
BP has 100% interests in two deepwater PSAs, West Aru I and II, and
32% interests in the Chevron-operated West Papua I and Ill PSAs. These
PSAs will be relinquished pending approval from the government of
Indonesia.
224 BP Annual Report and Form 20-F 2015