Winter 2003 (11.4)
Pages 78-81

BP Current Developments
Construction of Pipeline in Full Swing
by Tamam Bayatly

Construction work on the Azeri Project is progressing on schedule and is now over 80 percent complete for Central Azeri (CA) First Oil vs. 80 percent planned for this year and more than 50 percent for First Gas through the Compression and Water Injection Platform (C&WP) vs. 49 percent plan. The West Azeri (WA) facilities construction progress will be 38 percent vs. 36 percent plan by the end of the year. The project currently employs more than 7,000 Azerbaijan nationals at its four construction sites in Baku, which far exceeds the initial job target of 5,000 Azerbaijan nationals.

Jacket Ready To Sail
At Baku Deepwater Jackets Factory (BDWJF), the construction of the jacket for the Central Azeri Drilling and Production Platform (PDQ) is completed. The jacket was set on the STB-1 transportation barge on December 7, 2003, and is sea-fastened, ready to sail out to its location at Central Azeri (CA) in February. We expect offshore installation activities to be completed by the end of March 2004.

Below: Pipe for the BTC pipeline being strung along the Right of Way.

The CA PDQ jacket is the largest structure ever to be installed in the Caspian Sea. It has been fully assembled in the country using local construction infrastructure including BDWJF facilities. The jacket has 12 piles. The total weight of these piles, which are 146 meters long each, is 8,100 tons, while the total weight of the jacket itself is 14,130 tons, including the floatation tanks. The height of the jacket is 143 meters and it will be installed at a water depth of 120 meters.

The offshore installation will use two strategic vessels: The Derrick Barge Azerbaijan (DBA) and the Transportation Barge STB-1. The CA jacket is now fastened on this vessel and will be moored at BDWJF until sail-away in February 2004. Once the jacket has been launched, the deck strengthening will be completed, making this vessel capable of transporting topside weights of up to 15,500 tons. Its next task will be the transportation of CA topsides in July 2004.

The construction of the jacket began at the BDWJF fabrication yard in March last year and was completed end of November 2003. The jacket was built by BOS-Shelf-a joint venture between Saipem (formerly Bouygues Offshore of France) and BDJF, which is a SOCAR facility. Four main local subcontractors were used and 1,418 local Azerbaijanis (94 percent of the total labor force) were involved in the jacket construction activities, involving more than 2 million man-hours.

Most of the local staff have been successfully trained and re-trained in various disciplines. We have been particularly successful in the Health, Safety and Environment (HSE) training program as a result of which there are no expatriates in the jacket project's HSE positions, these are now 100 percent run by Azerbaijan nationals.

The Central Azeri PDQ topsides fabrication is progressing on schedule. Following the successful installation of the Living Quarters modules on the integrated deck in summer, we completed the onshore testing of the drilling derrick and safely installed the Drilling Support Module (DSM) and the Derrick Equipment Set (DES) Module whose total weight is 2400 tons, on the integrated deck. With these modules already installed, the Derrick itself and the flare boom remain the major outstanding lifts, and these are scheduled for January 2004.

Above: (Top) Arrival of drilling modules by transportation barges TNI-2 and TMI-6 at SPS for Central Azeri platform on August 28, 2003.
Bottom: Inside view of the construction of the new higher capacity crude oil tank at Sangachal Terminal Expansion Project (STEP) area.

East Azeri Template
Some weeks ago, we successfully completed the offshore installation of the subsea drilling template for East Azeri (EA). The template has been secured to the sea bed at the location of the future EA platform, which is scheduled to be in production in 2007.

The equipment will enable the Dada Gorgud semi-submersible rig to pre-drill a number of wells prior to the installation of the platform, thus expediting a much faster ramp-up of oil production, which will benefit both Azerbaijan and AIOC's shareholders.

The fabrication of the 168-ton template, which has three support piles - 33 meters each, and two docking piles - 47 meters each, began in June 2003 at Baku Deepwater Jacket Factory (BDJF) and was completed in November 2003. The total weight of the template is 506 tons.

Left: Pipe for BTC being strung along the Right of Way and prepared for welding.

The EA pre-drilling program currently consists of six wells; five of them are planned as producers and one as a cuttings re-injection well. Two of the production wells will have an open hole gravel pack completion installed as part of the pre-drilling program.

All this work was completed to BP's high safety standards resulting in no harm to people. Our project team and contractors have once again demonstrated their firm commitment to performing to BP's and our partners' high safety expectations. We are also pleased that the fabrication and installation have relied entirely on local infrastructure enabling us to considerably increase involvement of local workforce.

In addition, at BDJF fabrication yard, the C&WP jacket is taking shape, the West Azeri deck construction is progressing on schedule, and overall BDWJF site has been performing as a world-class construction facility.

The Subsea Pipelay Program
The program, which commenced late June, has achieved tremendous progress. Already 170km of the 30-inch oil pipeline (over 90 percent) is installed (17 km remaining to complete) with the peak pipe-lay rates being over 2.5 km per day. Once the 30-inch oil pipeline is complete, we will commence laying the 28-inch gas pipeline early next year and this will continue into the spring of 2004. Pipe-coating activities for Central Azeri are nearing completion at EUPEC. Pipe for East and West Azeri is being manufactured in Japan and we expect the first shipments to be delivered to Azerbaijan in January next year. The project has also commenced onshore fabrication of subsea tie - in spools and valve assemblies to complete the pipelines, and has commenced the upgrade of the diving support vessel Tofig Ismayilov at SPS. The vessel will enter service on the project in mid-2004 to undertake diving and cable lay work. Subsea pipelay progress is overall on track for achievement of First Oil from Central Azeri early 2005.

Left: Central Azeri production and drilling platform jacket on a barge being towed to sea.

Sangachal's Expansion Program
The Sangachal Terminal Expansion Program (STEP) construction activities, which are aimed at building one of the world's largest terminals, are progressing on schedule and within the budget. Overall STEP construction works are over 70 percent complete with all major equipment already delivered to the site. Currently, the program employs over 3,000 people of which more than 75 percent are local Azerbaijan citizens. The majority (55 percent) are local residents from adjacent villages and towns of the Garadagh district.

The main completed works have included the installation of most of the major equipment and some of the buildings have already been commissioned. Progress on the tank construction has been extremely good with the two main tanks having already reached their full height of 22 meters. These two tanks are over 90 percent complete. Foundation works for the third crude oil tank with the capacity of 800,000 barrels are currently underway.

The installation of the gas dew point control plant is partly complete. The plant was built in Canada and brought to Azerbaijan through the canal system using four riverboats. The plant consists of 22 skids and a number of containers with a total transport weight of 1600 tons.

The works on the Baku-Tbilisi-Ceyhan (BTC) Head Pump station in Sangachal are progressing on schedule with over 30 percent of the works already complete. The completed work includes pump foundation works and steel structure works for the buildings. The fabrication works for the 14-meter high pump shelter building is nearing completion in preparation for receiving in January 2004 the first three of the planned five BTC oil export pumps. The first oil transport pipe joints in the substation have also been successfully installed and the construction of the BTC buildings is nearing completion.

Left: The BTC pipe welding activities along the pipeline route.

Foundation works for Phase 2 process trains have commenced and are progressing on schedule. The delivery of the equipment for the trains is underway.

Work on the Shah Deniz section of the STEP, which commenced in October, is progressing ahead of schedule. Currently, the Shah Deniz section activities are concentrated on civil works. The Shah Deniz work started with the construction of some bridges and roads to make sure that during the winter period the workers can safely reach the work site.

The main contractor of the STEP works, Tekfen/Azfen has reached more than 8 million man-hours milestone without any accident or injury from the beginning of the construction works in November 2001. This is a remarkable achievement and is the result of extremely hard work and dedication to safety of all the people involved. The STEP team has undertaken over 250,000 man-hours in HSE training, which has been a key factor in the good safety performance.

Human Development
The Sangachal Terminal Expansion Program (STEP) has also achieved remarkable progress on Human Development, Social Investment and Community Development Programs. This year the ACG/STEP Human Development Program has supported 36 projects of various scales, mainly in the Garadagh district area where the facility is located. These are programs, which are aimed at supporting the communities in such areas as health, economic development and education. The programs have covered most of the local communities including the two refugee communities in the neighboring Umid and Sahil refugee settlements. The number of people benefiting from these projects is more than one million as the ACG/STEP safety support through the Salyan Highway Project directly affects several thousand people every day. The STEP Human Development Project won the BP Group's Annual Helios Progressive Category Award in November.

ATA Yard
At this construction site, extensive yard upgrade works are complete. We have recently completed 55 new buildings with accommodation for 260 people and a canteen for 400 people. The upgrade works have also included installation of 14,500 stone columns and 1,000 steel columns. Extensive modernization and strengthening of the quayside, where the C&WP topsides will be loaded out onto the STB-1 transportation barge, is ongoing and this work is due to be completed in March 2004. At the yard we have already constructed skidways and support units for the C&WP deck construction.

The panels of the cellar deck have already been erected and the construction of the weather deck panels is ongoing. The fabrication of 2,500 tons of primary steel structures has also been completed in Ceyhan. The Central Azeri C&WP employs over 1,300 people of whom 81 percent are local Azerbaijan citizens. All local employees have been through skills development and refresher training courses. Some 36 local companies have been involved in this project through the main contractor. The ATA yard upgrades have, to date, used a significant amount of local material and goods. The project is also planning to launch community investment programs for the adjacent areas early next year.

Baku-Tbilisi-Ceyhan Project
BTC construction activities have continued on schedule. Today, we have major activities in 17 construction sites along the entire BTC route between Baku in Azerbaijan and Ceyhan in Turkey. The project has been spending $4 million a day since the commencement of construction activities and this will continue through next year until the completion of the pipeline by the fourth quarter of 2004.

By the end of this year, BTC will have spent about $1.5bn and will have committed $2.6bn of the $2.95bn total budget. BTC remains within this original budget and on schedule to be completed in time to export First Oil from the Azeri Development in the first quarter of 2005. Today the project employs about 12,000 people in the three countries, of whom over 3,250 are in Azerbaijan and about 76 percent of these are Azerbaijan nationals. The project activities have required 4 million km of driving a month, which is about 100 times around the world.
By the week of the 12th of December 635km of the construction corridor had been prepared across the three countries, with over 480km of pipe placed ready for welding, about 425 km of pipe welded, about 240 km of land trenched and over 200 km of pipe lowered in the ground. In total we have backfilled about 190 km of land in the three countries. Overall, BTC construction works will be over 50 percent complete by the end of this year with 25 percent of the pipe welded.

Finance negotiations with international finance organizations including the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, export credit agencies and commercial banks, are now complete with the IFC and EBRD boards approval of up to $250 million in loans to the pipeline on the 4th and 11th of November respectively.

The endorsement of the financing package comes after more than two years of extensive monitoring and scrutiny of the project's environmental and social impact, as well as a thorough public consultation process.

As planned, the BTC Co. Board of Directors met in London in December 2003 to endorse the BTC financing package and this effectively closed the financing terms. The formality of signing the documents with all the sponsors, lenders and the governments of the three transit countries will take place in January, which will enable us to receive the first drawdown under the BTC external financing in the first quarter of 2004 as planned.

The project has set new standards in transparency and openness. All project documentation has been available on the project's Web site and in hard copy in the three host countries. The project has already made public its commitment to report revenues paid to each of the three host countries.

The BTC project has been characterized by unprecedented consultation - with each of the 450 villages along the route and the 30,000 landowners and land users. We have discussed issues extensively with the host governments, local governments, local and international NGOs, local and international media and the international community. Our commitment to both consultation and openness will continue beyond the disclosure period.

Shah Deniz Project
The Shah Deniz gas and condensate development project has made significant progress since Stage 1 sanctioning in February 2003. In Azerbaijan, the project is currently progressing the upgrade of the Zygh 3 yard facilities to allow fabrication of the TPG 500 platform leg sections. Work initially commenced in October of this year and significant progress has been made in clearing and developing the site for the fabrication to commence in early January 2004.

Establishment of the site offices and infrastructure is nearing completion and mobilization of the BP and contractor/subcontractor teams is substantially complete with more than 300 people working on the project in Baku. As it is the case with all BP projects, HSE training and performance are considered of utmost importance, and at Zygh all personnel have completed safety inductions and training to ensure a safe place to work for all the people working at the site.

The first shipment of leg materials comprising leg chord sections, nodes and braces arrived in Baku during November and have been off-loaded and stored at the Zygh 3 yard. Assembly work on the legs will commence in January 2004. Work to strengthen the existing quayside and provide reinforced areas to fabricate the TPG 500 leg foundation cans is progressing.

The main TPG 500 hull is being fabricated in four self-floating strips at Keppel FELS shipyard in Singapore, these self-floating hull strips will be transferred into the Caspian Sea via the Volga Don canal system and will arrive in Baku in October of 2004.

Offshore, BP spudded the second pre-drilling development well in September, as part of the Shah Deniz Stage 1 Pre-drilling Program. The well is located on the northeast flank of the Shah Deniz field at approximately 101 meters of water depth. The design depth of the well is 6,610 m. and has now reached 6,244 m. Drilling should be completed by late January 2004. Then the third pre-drill well will be dug, a project estimated to take about six months to complete.

South Caucasus Pipeline (SCP)
Sumitomo Corporation will be supplying 700km of large diameter welded steel pipe for the South Caucasus Pipeline (SCP). BP expects the arrival of the first SCP pipe in Azerbaijan in January, pipe-lay activities to commence in the fourth quarter 2004. Engineering and procurement activities are continuing on schedule.


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