International companies vowed Wednesday to push ahead with new Caspian projects including exploration offshore Azerbaijan, a possible new platform at the flagship ACG fields, and a tentative commitment to raise production at Kazakhstan's giant Kashagan field beyond the current 370,000 b/d target.
Equinor signs new Azeri exploration deals
BP considers seventh ACG oil platform
Total starts first Absheron development well
Kashagan partners consider output increase
At a conference in Baku, Norway's Equinor (previously Statoil) signed agreements relating to two areas east of the Absheron peninsula: a Risk Service Agreement on appraisal and development of the Karabagh oil field and a Production Sharing Agreement for the Ashrafi, Dan Ulduzu, Aypara area.
Statoil provided no detail on the resources it expected to find. Karabagh was targeted unsuccessfully in the 1990s by Los Angeles-based Pennzoil; Azeri state media have reported it holds 100 million mt (733 million barrels) of oil.
Separately, Gary Jones, BP regional president for Azerbaijan, Georgia and Turkey, talked up the company's latest Azeri PSA, signed in London last month and dubbed D230. He likened it to Azerbaijan's ground-breaking ACG fields, developed by a BP-led consortium under the so-called "contract of the century" of 1994.
"If successful the area has the potential to be the largest oil development in Azerbaijan since BP developed the ACG fields. In the event of a commercial discovery BP will be looking to invest billions of dollars in drilling, building onshore and offshore infrastructure such as pipelines," Jones told the conference.
It comes as BP has been bringing on stream Shah Deniz 2, intended as a new source of gas for southern Europe and Turkey, with an inauguration ceremony held in Azerbaijan on Tuesday.
Jones highlighted two further exploration projects, one in very shallow coastal waters off the peninsula, and another, known as Shafag Asiman, entailing high-pressure drilling that he said "could be" the next Shah Deniz gas field.
More concretely in terms of near-term production, BP and its partners are discussing building an additional new platform at the ACG (Azeri Chirag Deepwater Gunashli) complex to add to the six already in place, helping support volumes, Jones said.
ACG production has mostly been in decline over this decade, but rose nearly 3% year-on-year in the first quarter to 597,000 b/d, amounting to about three quarters of the country's oil production.
Last September, BP and its partners signed a new production sharing agreement for ACG until 2049, which Jones said provided confidence for investors and showed Azerbaijan's willingness to retain BP, albeit with a slightly reduced stake.
A decision to build the Azeri Central East platform would be made with BP's partners, including state oil company SOCAR, early in 2019, and the facility would probably be ready around 2022-23, he said.
On the new platform "we're looking at automation of the drilling facilities and at all sorts of opportunities to bring technology in You'd expect to see something advanced [from] what we've been doing before," he said.
"There's still lots of drilling to be done. We continue to look at ways of offsetting decline at ACG," he said, explaining these included gas lift technology and redeployment of existing slots on drilling platforms.
TOTAL'S CASPIAN AMBITIONS
Meanwhile on Kazakhstan, Total's senior vice president for the Caspian and Southern Europe, Bernard Clement, said the consortium developing the giant Kashagan field was starting to look at expanding production beyond the initial target of 370,000 b/d, having previously focused on stabilizing output from the highly challenging field, which came on stream in 2016.
He noted the onshore facilities are capable of handling 450,000 b/d of oil, implying this might be the next target level. "We are looking at options for further economic development. It's not easy because the Caspian is costly and weather conditions in particular are rough," Clement told S&P Global Platts.
"The existing onshore plant has a capacity of 450,000 b/d, so beyond the targeted plateau of 370,000 you have first-phase, which could go up to 450,000 b/d. It's too early to say," he said.
In Azerbaijan, Clement said Total and SOCAR had just started drilling the first development well at the Absheron gas and condensate field, which is intended to supply gas to the domestic market from around the end of 2019 or early 2020, with condensate exported via the BTC pipeline along with ACG oil output.
Absheron has been scaled down to become a lower-cost project, reflecting the economics of local gas supply. Output in the first phase will be around 35,000 b/d of oil equivalent, of which 12,000-13,000 b/d will be condensate.
First-phase production will be from just one well, with which the partners aim to evaluate future stages, Clement said. The project has entailed building a new, heavy drilling rig in Azerbaijan capable of handling high-pressure fields.
