Introduction Fergus MacLeod Head of Investor Relations
1997 Baku Analyst Trip 1989 Access Agenda E & W Siberia Caspian Algeria GOM Vietnam Deepwater Nigeria Yemen Venezuela Lombok Angola
1997 Baku Analyst Trip Current Environment Competition Increasing Challenge to BP Access competition Keep ahead of pack New players Play to strengths Terms erosion Exploration track record Deepwater technology Relationship…
1997 Baku Analyst Trip Production Profile mb/d 2500 2000 1500 Others 1000 500 BP 0 1995 2000 2005 2010 2015 2020
E&P Strategy Update Tony Hayward Chief Executive, Exploration & Production
BP Azerbaijan organisation BP Azerbaijan President David Woodward / Bill Schrader* Commercial Director Chief of Staff Phil Home Erich Krumanocker Executive Assistant Georgia General Manager Kamala Husseynli Hugh McDowell Turkey…
Project start-ups 2005 2006 2007 2008 - 2009 2010 and beyond 9 Valhall Waterflood 9Cannonball Temsah Atlantis King Sub-sea Thunder Horse Ursa Expansion Atlantis North Flank Paz Flor Egypt LNG T2 9 Mad Dog 9Redevelopment…
Production to 2010 mmboe/d 5 Divestments closed in 4 2006 3 TNK-BP 2 New profit centres 1 Existing profit centres 0 2001 2002 2003 2004 2005 2010 Actual prices and Production portfolio at 40 BP projection for 06-10…
Strategy building profit centres Alaska Alaska North North Sea Sea Russia Russia North North America America Gas Gas Azerbaijan Azerbaijan Deepwater Deepwater Egypt Egypt Gulf Gulf of of Mexico Mexico North North…
Resource growth & progression 2001- 2005 New Further discoveries appraisal, revisions 8.0 7.8 Start 01 End 05 Purchased Sold resources resources 25.9 12.5 Non-proved 4.4 40.7 9.1 15.2 2.7 Proved 1.9 18.3 41.1 59.0 6.7…
End 2005 resource by type Non-Proved Proved Conventional Oil Deepwater Oil Water Flood Viscous 41 bn boe 18 bn boe and Heavy Oil Conventional Gas LNG Gas Tight Gas Coal Bed Methane Between 2005 and 2010 11 bn boe of…
The ultimate prize 200 bn boe oil bn boe and gas initially Produced 38 in place Proved Non-Proved 18 Currently unrecoverable hydrocarbon 41 Does not include exploration potential
Summary New Profit Centres have arrived Major Projects underpin production growth through the end of the decade and beyond Power of incumbent positions Technology to unlock the resource base
Building a New Profit Centre: Azerbaijan Andy Inglis Deputy Chief Executive, Exploration & Production
Building a new profit centre: Azerbaijan Resource base Technology Project delivery Statecraft and diplomacy Sustainability through mutuality
Resource base: Azerbaijan ACG and Shah bn boe 0.4 Deniz Gross Produced Resource 6.1 Sanctioned Non-Proved Currently unrecoverable hydrocarbon 7.6 Source: BP data
Technology Reserves pull-through Maximising revenue Capital efficiency
Azerbaijan Project delivery Central Azeri - 2004 West Azeri - 2005 East Azeri 2006 ACG3 - 2008 Angola G. Plutonio - 2007 Bk31 North 2010+ Bk31 Central 2010+ Bk31 South 2010+ Bk18 West 2010+ Trinidad Cannonball 2006 Red Mango…
Statecraft and diplomacy
Sustainability through mutuality Workforce capability Local content Capacity building
Overview of Azerbaijan and BPs presence Rashid Javanshir Vice President, Onshore Operations
Geography UKRAINE KAZAKHSTAN M OL DO RUSSIA VA Odessa Constanta Black Sea Novorossiysk BULGARIA Caspian Sea ru s ho sp Supsa Bo TURK MENI STAN GEORGIA Istanbul Baku AR ME NI A AZERBAIJAN TURKEY…
150 years of oil production Further Developments 1400 ACG 2010 (1200 mmb/d) 1200 Phase 3 online 2008 1000 Today DW Oil rate (mbd) 800 G Azeri online 2005 600 Historical peak 1941 (475 mmstb/d) Chirag online…
Azerbaijans oil history Oil wells in the vicinity of Baku pumping oil into reservoir lakes in 1880s. The Nobel Brothers' oil wells in Photo: Azerbaijan National Archives. Balakhani, a suburb of Baku. View of Oil Rocks c. 1950s 2006…
BP Azerbaijan assets Novorossiysk Russia Kazakhstan Black Sea NREP NREP Pipeline Pipeline Caspian Sea Georgia WREP WREP Tbilisi Supsa Pipeline Pipeline Sangachal Sangachal Terminal Turkmenistan Terminal BTC ACG ACG…
BP Azerbaijan assets Total gross investment of 25bn, with over 21bn spend to date Peak production of over 1 million barrels per day and 840 mmcfd (8.7 bcma) gas from existing projects Sangachal - the largest terminal outside of…
Resources and Renewal Paul Clyne Vice President, Renewal
BP Azerbaijan net resource progression 2001 - 2005 Additions Current PSC appraisal and exploration 1.9 Start 01 End 05 resources resources 1.3 Non-proved 2.0 1.2 0.2 Proved 1.3 1.5 3.3 0.1 Produced *Totals in bn boe End…
Future potential 1,800 Potential gross oil + condensate production 1,600 production (mbd) Oil & condensate 1,400 1,200 1,000 800 PSC base 600 production 400 200 0 Further 2006 2009 2012 2015 2018 2021 2024 2027 2030…
Major Projects Delivery (Offshore) Bruce Luberski, Vice President, Major Projects Mike Skitmore, Vice President, Shah Deniz
ACG field ACG sanctioned resource 5.4 bn bbl Peak production gross 1.2 mmbd Capital cost gross 17 bn BP working interest 34.1% ACG gross production 1400 1200 1000 800 mbd 600 Deepwater Gunashli Azeri 400 200…
BP Azerbaijan vision End 2004 End 2006 The Future Sangachal Sangachal Sangachal East Azeri Chirag West East Azeri Azeri Central 2006 ACG Phase 3 Chirag l 2008 Chirag Azeri & West C&WP Central Azeri Shah Deniz 2 Azeri Shah…
Project schedule 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ACG PSC First Oil Early Oil Project First Oil C&WP Start-up Central Azeri & C&WP First Oil WA First Oil EA First Oil WA West &…
ACG early oil project (Chirag) Chirag platform Sanctioned 1994 First oil Nov 1997 Sangachal EOP terminal 2005 production exported 140 mbd gross 2005 Lifting and transportation cost 1.60/bbl Total investment 2.2bn
ACG full field development Sangachal Terminal Deepwater Chirag West Azeri Central East Azeri Gunashli EOP Phase 2 Azeri Phase 3 Phase 1 Phase 2 2008 Nov 1997 Dec 2005 Mar 2005 4Q 2006 90,000 te topsides One of worlds largest…
Sangachal history 2000 Early Oil Project
Sangachal history 2005 Early Oil Project Shah Deniz
Projects production line Production facilities engineering costs Build duration CA 30 Direct manhours/te (41) WA 29 (32) Months 28 Clo EA 27 CA CWP ne (15) (21) 26 WA 25 EA
Shah Deniz Stage 1 development
Shah Deniz Stage 1 development Sanctioned resource (Stage 1) 6.5 tcf (185 bcm) of gas 300 mmbbl of condensate Stage 1 peak production 840 mmcfd (8.7 bcma) Capex (upstream & midstream) 4bn Working interest 25.5% Shah Deniz Stage 1…
Shah Deniz Offshore pipeline beach pull TPG500 installation Sangachal Terminal on track Progress on SDX-04 appraisal
Statecraft and Diplomacy: The Story of BTC Michael Townshend Former Vice President, Onshore Operations & Projects
Regional context Ukraine Kazakhstan M ol do va Russia Odessa Constanta Black Sea Novorossiysk Bulgaria Caspian Sea us hor Geo Bo sp Supsa r gia Turkmenistan Istanbul A rm Baku en Azerbaijan ia Turkey…
The politics of welding Golden Weld Azerbaijan /Georgia Oct 04 1st Oil Azerbaijan May 05 1st Oil Georgia Oct 05 Golden Weld Azerbaijan /Georgia Oct 04
Social
Environmental
Project financing and NGO scrutiny Why external financing: Ensured pipeline built to international standards Provided political risk cover Impacts of external financing: Higher levels of NGO scrutiny Significant media coverage…
Scope and scale of BTC and SCP BTC SCP
Security and Integrity
Unexploded ordinance on right of way
Mud volcano ridge
Digging for the pipe & block valve station
Going down deep
River crossing
Ridgeline construction Turkey (and China)
Rock removal
Trench breakers and broken bones
Steep slope
Moving down
Nearly there
The end in sight
The end in sight
Value through Technology Fereidoun Abbassian Technical Director
Technology in support of business delivery Reserves pull-through Maximising revenue Capital efficiency
Technology in support of business delivery Reservoir Wells Integr ated m Syste Onshore terminal & Offshore production export facilities
Technology delivery track record Open hole gravel pack 3D seismic Drilling simulator Extended reach drilling 2000 -6000m West Azeri Platform Central Azeri Platform Chirag 1 Platform Well Profiles 0 Conventional Well ERD Well…
Strategic technologies Advanced seismic Intelligent completions Water Technology drivers Pereriv A Reservoir management Pereriv B Pereriv C Pereriv D New well delivery Pereriv E Zonal flow monitoring Field of…
Advanced seismic Aim Ocean bottom cable 4D seismic Monitor fluid movements in the reservoir BPs position Technology leadership area Industry leader in 4-D life-of-field monitoring
Azeri reservoir management CARSP: Phase 1 Gas Cap Depletion simulation for the Central Azeri Deep Water Oil Gunashli Water Gas Water Oil Chirag Azeri
Intelligent completions Down hole flow control valve Water Aim Increased production with fewer wells BPs position Azerbaijan is leading BP and the Industry Expandable screen Pereriv A Pereriv B Pereriv C Pereriv D…
Increased production on Azeri Water Oil 60,000 30,000 barrels per barrels per day production of oil day injection of water Gas Expandable Sand Screen Oil BP's Top 10 Oil Producers (ACG shown in red) 50,000 Water…
Zonal flow monitoring Real-time temperature data Fibre-optic sensor Aim from Central Azeri well B04 technology Time Real time monitoring of reservoir flow BPs position Zone A flow Depth World leader in development and Zone B…
Field of the Future TM Wells Offshore production facilities Cross Monitoring discipline real time collaboration data Advanced Collaboration Environment Integration Reservoirs Onshore terminals & Decision Analysis/ exports…
Workforce capability Professional Roles 2500 2000 1500 1000 500 0 2006 2007 2008 2009 2010 National Expats Forward projections: BP data
Local content Local content development m 2000 1800 1600 1400 1200 1000 800 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 Local sustainable spend Other spend (excluding projects)
Capacity building
Commercial Structure & Financial Performance Phil Home Commercial Director
PSC terms General principles Duration Accounting & Fiscal Exploration phase normally three years Accounting is in US Dollars with 2-3 well commitment Azerbaijan profits tax rate is fixed for 25 year development phase with a five…
Example: ACG PSC mechanism Profit Oil Shares Total Production X Net Back Government Contractor Contractor's RROR Price Share (%) Share (%) RROR < 16.75 % 30 70 16.75 % RROR < 22.75 % 55 45 RROR 22.75 % 80 20 OPEX Recovery 100%…
ACG PSC: Impact of higher oil prices Lower production and reserve entitlement but much higher returns and NPV BP net ACG reserves and BP net ACG NPV and IRR entitlement factor 1400 90 1200 80 Entitlement Factor (%) 1000…
BP Azerbaijan net production BP net production 500 400 300 mboed 200 100 0 2005 2006 2007 2008 2009 2010 40/bbl 60/bbl Production profiles include sanctioned developments only: Chirag, Central Azeri, West…
BP Azerbaijan high margin barrels 2006 Barrel 70/bbl dated Brent (BP net basis) Average Realisation 65.9/boe Net income 35.1 Cash costs Tax 13.7 Lifting costs 1.0 Non-cash costs M&T costs 9.5 4.9 Cash costs Other cash…
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