BP 2013 Annual Report Download - page 246

• BP, as operator, holds a 30.1% interest in and manages the Baku-
Tbilisi-Ceyhan (BTC) oil pipeline. The 1,768-kilometre pipeline
transports oil from the BP-operated ACG oilfield and gas condensate
from the Shah Deniz gas field in the Caspian Sea, along with other
third-party oil, to the eastern Mediterranean port of Ceyhan. The BTC
pipeline has a capacity of 1mmboe/d with average throughput in 2013
of 681mboe/d.
BP is technical operator of, and currently holds a 25.5% interest in, the
693-kilometre South Caucasus Pipeline, which takes gas from Azerbaijan
through Georgia to the Turkish border and has a capacity of 134mboe/d
with average throughput in 2013 of 82mboe/d. In addition, BP operates
the Western Export Route Pipeline between Azerbaijan and the Black
Sea coast of Georgia (as operator of Azerbaijan International Operating
Company).
BP currently has appraisal programmes and development activities in
Oman.
In December BP and the Sultanate of Oman government signed a gas
sales agreement and an amended exploration and production sharing
agreement (EPSA) for the development of the Khazzan field in Block 61
with BP as operator. In February 2014 the Sultan of Oman issued a royal
decree approving the amended EPSA. The Sultanate of Oman
government acquired a 40% stake in Block 61 in February 2014 through
Makarim Gas Development LLC, a wholly-owned subsidiary of the state-
owned Oman Oil Company Exploration & Production (OOCEP).
Construction work is expected to begin in 2014 with gas production
expected to start in 2017.
In Jordan BP has decided to withdraw from the Risha concession, which
resulted in a write-off of $121 million related to the costs of exploration
drilling activities, as well as a $257-million write-off for costs relating to
the concession.
In Abu Dhabi, during 2013 we had equity interests of 9.5% and 14.67%
in onshore and offshore concessions respectively. The Abu Dhabi
onshore concession expired in January 2014 with a consequent
production impact of approximately 140mboe/d.
Also in Abu Dhabi, we have a 10% equity shareholding in the Abu Dhabi
Gas Liquefaction Company, which in 2013 supplied 5.4 million tonnes of
LNG (281 bcfe regasified).
In India, BP has a 30% interest in six oil and gas PSAs operated by
Reliance Industries Limited (RIL), a 50% interest in one operated PSA,
and is a partner with RIL in a 50:50 joint operation for the sourcing and
marketing of gas in India.
• In May RIL and its partners BP and NIKO Resources Ltd announced a
significant gas and condensate discovery in the KG D6 block off the
eastern coast of India.
• In August RIL and BP announced a new gas condensate discovery in
the deepwater block CYD5 (BP 30%) situated in the Cauvery basin, off
the east coast of India. This is the second discovery in the block.
• In August the government approved the Field Development Plan (FDP)
for the R-Series project in the KG D6 block and has reviewed the
appraisal plan for the KG D6 discovery.
• Following approval by the relevant authorities in 2012, a number of
activities are being progressed to arrest the decline in production rates
and to extend the life of the block KG D6 producing fields. These
include new work-over wells and the installation of additional
compression and water handling capacity.
• In January 2014 the Government of India issued notification of new
guidelines for pricing of domestic gas, which will be formula driven,
effective from 1 April 2014.
In Iraq, BP holds a 38% working interest and is the lead contractor in the
Rumaila technical service contract. Rumaila is one of the world’s largest
oilfields and was discovered by BP, as part of a consortium, in 1953 and
comprises five producing reservoirs.
Australasia
In Australasia, we are active in Australia and Eastern Indonesia.
In Australia, BP is one of seven partners in the North West Shelf (NWS)
venture, which has been producing LNG, pipeline gas, condensate, LPG
and oil since the 1980s. Six partners (including BP) hold an equal 16.67%
interest in the gas infrastructure and an equal 15.78% interest in the gas
and condensate reserves, with a seventh partner owning the remaining
5.32%. BP also has a 16.67% interest in some of the NWS oil reserves
and related infrastructure. The NWS venture is currently the principal
supplier to the domestic market in Western Australia and one of the
largest LNG export projects in Asia with five LNG trains in operation. BP’s
net share of the capacity of NWS LNG trains 1-5 is 2.7 million tonnes per
annum of LNG.
BP also holds a 5.375% interest in the Jansz-lo field and 12.5% interests
in the Geryon, Orthrus and Maenad fields which are part of the Greater
Gorgon project.
BP holds a 70% interest in four deepwater offshore exploration blocks in
the Ceduna Sub Basin (this follows the farm-down of 30% of our interest
in the four blocks to Statoil in April). BP, as operator, expects to drill four
deepwater wells beginning in 2016 in this frontier exploration basin,
located within the Great Australian Bight off the coast of southern
Australia.
BP is also one of five partners in the Browse LNG venture (operated by
Woodside) and holds a 17% interest.
• In September the Browse joint operation partners decided to change
the concept from an onshore LNG plant at James Price Point to an
offshore floating LNG concept resulting in an impairment of
$251 million. The proposed development remains subject to regulatory,
joint operation and internal BP approvals.
• In September gas production commenced at the Woodside-operated
North Rankin Phase 2 compression platform, designed to extend the
life of the North West Shelf production to 2040.
In Eastern Indonesia, BP has 100% interests in two deepwater PSAs:
West Aru I and II. The PSAs are located 200 kilometres west of the Aru
island group. A seismic campaign covering 5,000km2in the West Aru
PSAs was completed in September. In addition, BP owns a 32% interest
in the Chevron-operated West Papua I and Ill PSAs, located 120
kilometres to the south of our Tangguh LNG plant (BP 37.16% and
operator).
BP received approval from the government of the Republic of Indonesia
in November to transfer its 100% interest in the North Arafura PSA,
located on the coast of the Arafura Sea, 480 kilometres south east of the
Tangguh LNG plant.
Downstream analysis by region
The downstream business includes our global fuels, lubricants and
petrochemicals businesses. We have significant operations in Europe,
North America and Asia, and also manufacture and market our products
across Australasia, Southern Africa and Central and South America.
We made significant progress in our plans to reshape the US fuels
business, build new capability and improve technology in 2013.
Our downstream business operations are detailed below by geographical
area with associated significant events for 2013.
North America
BP is active in North America through our refineries, terminals, pipelines,
retail sites, lubricants, aviation and petrochemical plants.
• To improve production, increase capacity or reduce unit cost we built
and reconfigured major units at three refineries.
–Whiting refinery – commissioning of all major units of the Whiting
refinery modernization project was completed in December 2013.
As part of the project, we built or reconfigured almost every
process unit, including crude distillation and coking units as well as
hydro-treating sulphur recovery and coking capacity. The upgrade
increases the refinery’s heavy oil processing capability, enabling
processing of up to 80% of heavy, sour crude. Whiting’s Midwest
location provides advantaged access to heavy Canadian crudes and
access to three major geographic crude sources.
–Toledo refinery – BP-Husky Refining LLC successfully started up a
new naphtha reformer in March 2013. It is intended to improve the
plant’s efficiency and competitiveness and reduce refinery air
emissions.
–Cherry Point refinery – We completed a state-of-the-art diesel
hydrotreater and hydrogen plant in May 2013. The units enhance
our ability to meet regulations calling for lower sulphur diesel fuel.
242 BP Annual Report and Form 20-F 2013