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    BP Cuts Caspian Costs as Production Rises

Summary

Output is being boosted by Shah Deniz 2.

by: Dalga Khatinoglu

Posted in:

Natural Gas & LNG News, Asia/Oceania, Corporate, Exploration & Production, Import/Export, Financials, Greater Caspian News, Caspian Focus, Infrastructure, Pipelines, South Caucasus (Baku-Tbilisi-Erzurum|BTE), Trans-Anatolian Gas Pipeline (TANAP) , News By Country, Azerbaijan

BP Cuts Caspian Costs as Production Rises

BP-led Azeri projects in the Caspian Sea cut expenditures in the first quarter, but gas production increased significantly, the company announced May 13.

Operational expenditures at the four projects rose 38%, but total capital expenditures fell 32.66% year on year to $569mn in January-March

BP-led projects:

Capex(mn $)

Y/Y change

Opex (mn $)

Y/Y change

Azeri-Chirag-Guneshli

279

7.3%

138

35.3%

Shah Deniz (I&II)

267

-35.66%

191

20.6%

Southern Caucasus pipeline

6

-96.36%

25

212%

Baku-Tbilisi Ceyhan pipeline

17

240%

9

-47%

Total

569

-32.66%

363

38%

Source: BP

Despite the lowered costs, gas output rose thanks to Shah Deniz 2. BP produced 4.3bn m3 from Shah Deniz in 1Q19, 52% more than in January-March 2018. However, associated gas production from Azeri-Chirag-Guneshli declined by 5% to 0.5bn m3 due to more re-injections to oil fields to keep barrels.

Azerbaijan’s total gas output increased 36% year-on-year to 6bn m3 in first quarter. Around 80% of the country’s production came from BP-led projects. Restricted production launched at Shah Deniz 2 in June 2018, and has been increasing gradually. It is due to reach capacity of 16bn m3/yr in 2020.

The Southern Caucasus Pipeline, the Caucasian part of Southern Gas Corridor, was completed last year. The route will deliver 6bn m3 of Shah Deniz 2 gas to Turkey next year and a further 10bn m3/yr to the EU by 2021.