Winter 2001 (9.4)
BP Current Developments
Contracts Signed for ACG
On November 30, 2001, AIOC signed six major contracts for
Phase 1 construction activities in support of the Full Field
Development of the Azeri, Chirag and deepwater portion of the
Gunashli (ACG) fields in the Azerbaijan sector of the Caspian
Sea. These include two contracts with McDermott Caspian Contractors
Inc. for the fabrication of platform topsides and offshore pipelay.
The other contracts are with Bouygues Offshore for jacket, piles
and drilling template fabrication; Emtunga International for
living quarters; Saipem for transport and installation activities;
and Eiffel for the platform-drilling module.
AIOC selected these companies prior to the ACG Steering Committee's
sanction for the construction stage of the Phase 1 of the Full
Field Development project on August 30, 2001. The extensive,
competitive tendering process spanned eight months and involved
16 companies. The November 30 contract award was preceded by
a three-month interim award issued to the five international
contractor companies in order to finalize contracts for construction
activities. These contracts have a total value of $750 million.
AIOC also has a contract
with Halliburton, whose subsidiary company Kellogg Brown &
Root, based in London and Baku, is undertaking the Engineering
and Procurement work for Phase 1. This contract was awarded in
mid-1997. Two other existing contracts are with the UK company
KCA for drilling facility engineering and with CDC, a joint SOCAR/Santa
Fe company, for pre-drilling.
AIOC recently issued a Letter of Intent to award a contract to
Azfen/Tekfen for the provision of preliminary civil works as
part of the Sangachal Terminal Upgrade. Mobilization activities
commenced in November 2001 to allow a start on site in January
2002. The work is scheduled to be completed in June 2002.
Taking media questions after the December 2001 Phase 1 contracts
signing ceremony, are (from right to left): Majid Karimov, Minister
for Fuel and Energy, David Woodward, President of AIOC, Neil
Show, AIOC Vice-President Phase 1, and George Siler, AIOC Vice-President,
Phases 2 and 3.
Tender submissions for the main construction activities and tank
construction at the Terminal are under evaluation. Contracts
for these activities are expected to be awarded within the next
few months. In addition, a contract for the Compressor and Water
Injection Platform (C&WP) topsides will be awarded in the
third quarter of 2002. The contract values for Phase 1 will then
total in excess of $1.05 billion.
Phase 1 Construction
The $3.4 billion Phase 1 project of Azeri-Chirag-Gunashli is
expected to bring to Azerbaijan enormous long-term oil revenues
and related tax revenues; upgraded infrastructure for use on
both this project and other potential projects; renewed and enhanced
skills, benefiting the oil and gas sector and other industries;
world-class international contractors, bringing technology, know-how
and investment; world-class health, safety and environmental
standards; and an enhanced international reputation.
Left: Niyamaddin Babayev, 13-year-old Grand
Prize winner of AIOC's Sixth Children's Mugham Festival.
of the resources needed to bring Phase 1 to successful completion
are already in Azerbaijan. Both the operator and the main contractors
are working to ensure a significantly high level of utilization
of Azerbaijan's facilities and involvement of local workers throughout
the construction works.
An estimated 80 percent of the project work will be carried out
by Azerbaijanis and more than 3,000 direct local construction
jobs will be crated at peak production. Some $75 million will
be invested to upgrade Azerbaijan's construction and marine facilities,
which will be involved in the Phase 1 construction works.
It is in everyone's interest to increase Azerbaijan's participation.
All partners to the project need cost-effective local suppliers,
a strong and diverse local economy and political and economic
stability to take their business forward. As in all the Production
Sharing Agreements (PSAs), Azerbaijan's and the foreign oil companies'
interests are aligned. The projects should focus on quality,
cost and schedule. High quality ensures reliability, safety and
Phase 2 in Progress
Phase 2 of the ACG Full Field Development project has moved one
step closer to reality by shifting from the Select Stage (Project
Concept Selection) to the Define Stage (Detailed Engineering).
Phase 2 is one of the largest projects within the framework of
the PSA for the development of the ACG. The Phase 2 project will
recover approximately 1.35 billion barrels of reserves from West
and East Azeri fields, while also accelerating Phase 1 production,
leading to a total recovery of 2.775 billion barrels from the
Azeri field. First Oil is estimated in mid-2006 and mid-2007
for West and East Azeri respectively.
Left: The First "Democratic
Debate" held in the BP-sponsored "Children's School
AIOC and Shah Daniz consortia refurbished the school gym area
in Sangachal, a town southwest of Baku where the companies' onshore
terminal is located. The project is part of the companies' social
investment program for Azerbaijan and was celebrated with the
Sangachal communities, school teaching staff and students at
the commencement of the new school year.
A local company carried out the refurbishment works. The contractor
company's personnel were provided with safety training in which
special attention was given to teaching BP's safe working practices.
By working together with the local Sangachal contractor and providing
training for their personnel, AIOC and Shah Daniz consortia have
helped them understand and achieve the companies' standards,
especially with regard to Health, Safety and the Environment
(HSE). The companies are keen to help build a local service industry
in Azerbaijan, and this small project provided an ideal opportunity
for the consortia to develop the capability of a local contractor
such that they should be able to compete more effectively for
further projects in the future.
Oil Spill Workshop
On November 19-21, 2001, the Azerbaijan government held its first
workshop on National Oil Spill Preparedness, Response and Cooperation.
The event was organized in Baku in collaboration with the International
Maritime Organization (IMO), the United Nations' specialized
agency that deals with oil spill preparedness, response and coordination
planning. This important national effort was sponsored by BP,
the European Bank of Reconstruction and Development (EBRD) and
the United Nations Development Program (UNDP). The Caspian Environment
Program facilitated the workshop.
Water for Shongar
In October 2001, BP and its partners in the Inam PSA inaugurated
two new facilities in the Shongar village near Baku. The newly
built sewage system facility, which is designed to international
standards, provides a full cleaning of the wastewater from the
village through biological treatment. The village, which did
not previously have a sewage system, can now use the fully cleaned
wastewater for agricultural purposes.
The second project sponsored by the Inam partners was designed
to upgrade the water pumps based in the Mushfig settlement, through
which the Shongar village is supplied with fresh Shollar water.
The water supply equipment was completely upgraded, and the pipe
within the water pump station was replaced by a new supply service
and then combined with the pipeline that carries water to Shongar.
The 18-km water pipeline between Mushfig and Shongar was fully
inspected before combining it with the pump station. As a result,
a 920-meter section of the pipeline was replaced and other parts
were refurbished. The villagers now have an uninterrupted, healthy
Shollar water supply system.
A new information and education center called the Baku Parliament
School opened through BP's sponsorship at the start of the 2001-2002
school year. BP undertook the funding of the office refurbishment
and the purchase of equipment for the new center. The main goal
of the Parliament School, which was founded by an initiative
called Debates in Civil Society, is to support teaching staff
and students of Baku's schools in their efforts to master the
technique of conducting civil debates by making independent judgments
and conclusions, justifying their own arguments and learning
to respect others' views.
To honor the 100th Jubilee of Azerbaijani playwright Jafar Jabbarli,
BP and the Jabbarli Home Museum decided to award a Jafar Jabbarli
Prize on December 9 to Azerbaijan's best theatrical performance,
best actor, best actress and best literary research book and
publication. The jury, which included well-known poets, writers,
literature and theatre critics, producers, actors and a BP representative,
was chaired by the great dramatist's daughter, Gulara khanum,
Director of the Jabbarli Museum. This jury worked throughout
2001 reading the books and other publications submitted for the
competition and attending new theatrical productions and opera
performances nominated for the Prize.
This first-ever Jabbarli Prize competition turned out to be one
of the biggest theatrical events of the year. The main Jabbarli
prizes were awarded to "Aydin", a new production of
the National Drama Theater, and opera singers Azer Zeynalov and
Zemfira Ismayilova for their main roles in the opera "Sevil"
by composer Fikrat Amirov. The prize for best drama publication
went to well-known philosopher and dramatist Firuz Mustafa for
his book of plays called "Adsiz" (With No Name). In
addition, all of the participants in the performance "Solgun
Chikhaklar" (Faded Flowers) and the producer of this production
were awarded consolation prizes for their love for the stage.
This performance was an admirable contribution to the competition
by a group of retired actors, some of them over 80, who have
volunteered to set up a theatrical group called "Unfading
Stars" at the initiative of Azerbaijan's Cultural Foundation.
(9.4) Winter 2001.
© Azerbaijan International 2002. All rights reserved.
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