Azerbaijan Strategic Performance Unit

Sangachal Terminal PresentationBP Azerbaijan Strategic Performance Unit

July, 2009

2

Azerbaijan Country Context

•Area 86,600 km2 (33,774 sq miles)

•Population 8.5 million

Oil history – Famous Azerbaijan Oil Firsts:

• First oil well in the world was drilled (not dug by hand) in 1848 in Baku in Bibi Heybat oil field

• In 1897-1907 the 1st largest oil pipeline in the world was built from Baku to Batumi - 883 km x 20 sm

• In 1900 Azerbaijan produced more than 50% of world’s oil – 11.4 million tons

• About 80% of oil production during 2nd world war in former USSR was made in Baku (peak production – 23,5 million tons in 1941)

• First offshore oil production in the world started in Azerbaijan (1924 – Bibi Heybat beach, 1947 – Oily Rocks in open sea)

3

150 year of hydrocarbon production

4

BP and Co-Venturers’ Interests in Azerbaijan Projects

Alov

SOCAR 40%

BP

15%

StatoilHydro

15%

ExxonMobil15%TPAO

10%

EnCana

5%

ACG

BP

34.1%

Chevron

10.3%Inpex10.0%

SOCAR10.0%

StatoilHydro8.6%

ExxonMobil8.0%

TPAO6.7%

Devon5.6%

Itochu3.9%

Hess2.7%

Shah Deniz

StatoilHydro

25.5%

BP

25.5%

SOCAR

10.0%

LUKOil

10.0%Total

10.0%

NICO

10.0%

TPAO

9.0%

BTC

30.1%

2.4%

25%

3.4%8.9%

2.5%

6.5%

5%

5%

2.5%

8.7%

BP

Chevron

SOCAR

StatoilHydro

TPAO

Itochu

Hess

Total

Inpex

Eni

ConocoPhillips

SCPC

StatoilHydro

25.5%

BP

25.5%

SOCAR

10.0%

LUKOil

10.0%Total

10.0%

NICO

10.0%

TPAO

9.0%

BP and Co-Ventures' Interests in Azerbaijan Projects

6

First oil Nov 1997

Current production 130 mbd

gross

Total investment $2.2bn

Chirag platformChirag platform

Sangachal EOP terminalSangachal EOP terminal

ACG Early Oil Project

7

• Recoverable volumes 5.4 bn bbl gross

• Peak production 1 mmbd gross

• Total capital cost $25 bn gross

• 2009 production forecast 701.7 mmbd

• Project start-up dates:– EOP Nov 1997

– Central Azeri Feb 2005

– West Azeri Dec 2005

– Gas injection May 2006

– East Azeri Oct 2006

– Phase 3 (DWG) Apr 2008

ACG Full Field Development

1

ACG gross production

0

200

400

600

800

1000

1200

2005 2008 2011 2014 2017 2020 2023

Chirag

Azeri

mbd Deepwater

Gunashli

23 2

8

BP Azerbaijan Vision

Offshore: Chirag

People: 3000 BP staff +Agency

Infrastructure: • 2 export pipelines• Sangachal EOP Terminal

Production:

130 mbd

Chirag, CA/CWP, WA, SD,EA

4000 BP staff + agency

• 4 export pipelines and rail• Expanded Sangachal

terminal

• Oil over 600 mbd • Gas start-up

10 operating platforms + projects 2000 BP staff

• 3 export pipelines• One of the biggest terminals in the

world

• Oil 701.7 mmbd in 2009• Gas 415 mmscf/day in 09; peak 822

mmscf/day• Condensate peak of 58 mbd

GROWTH Capital Spend 2007: $9m/day

GROWTH Capital Spend 2007: $9m/day

Central Azeri / CWP

East Azeri

Sangachal

Shah Deniz 2

Sangachal

ChiragWest Azeri

Central Azeri / CWP

East Azeri

GROWTH Capital Spend 2004:

$12m/day

GROWTH Capital Spend 2004:

$12m/day

Chirag

NREP, WREP NREP, WREP, SCP, BTC, Rail

Sangachal

Baseline: 2004 End 2007 The Future

Shah Deniz 1

DWG Chirag

West AzeriCOP

NREP, WREP, SCP, BTC, Rail

Inam Alov

Shah Deniz 1

9

• Recoverable volumes (total) - 27.1 tcf of gas (1050 mmbbl of condensate)

• Stage 1 peak production - 830 mmscfd (142 mboed)• Total capital cost - $4 bn• 2009 gas production forecast - 415 mmscfd • 2008 condensate production forecast - 35 mbd

• Project start-up dates :

− TPG 500 platform installed: April 2006− First gas: Dec 2006− First gas to Georgia: Jan 2007− First gas to Turkey: Jul 2007

Shah Deniz Stage 1 Gas Sales

0

1

2

3

4

5

6

7

8

9

2005 2010 2015 2020 2025 2030

bcma

BOTAS

Stage 1

Decline SalesBTC SPA

Georgia SPA

Azerbaijan SPA

Shah Deniz

10

Sangachal Terminal 1992Sangachal Terminal 2000Sangachal Terminal 2001Sangachal Terminal 2002Sangachal Terminal 2003Sangachal Terminal 2004

Sangachal Terminal

Sangachal Terminal 2005Sangachal Terminal 2007

11

Northern Export Route

Western Export Route

BTCSCP

SANGACHAL TERMINAL

ACG going to AzerbaijanHP-SD going to

Azerbaijan

LP going toAzerbaijan

Third party export oil

Third party

A Strategic Hub for the Caspian:

Potential (Oil)

Operational (Oil)

Potential (Gas)

Operational (Gas)

Produced Water

Alov24” Oil

from Chirag

InamSD Phase IIDeepwater

Gunashli30” Oil

from Azeri

30” Oil from Azeri

30” Oil from Azeri

4”

26”12

SD Phase I

COP

12

BAKU

TBILISI

CEYHAN

Sangachal

Erzurum

TURKEY

GEORGIA

AZERBAIJAN

BLACK SEA

CASPIAN SEA

MEDITERRANEAN SEA

BAKU

TBILISI

CEYHAN

Sangachal

Erzurum

TURKEY

GEORGIA

AZERBAIJAN

BLACKSEA

CASPIANSEA

MEDITERRANEANSEA

South Caucasus PipelineFirst gas Dec ‘06Ultimate Capacity 20 bcmaLength 690 kmDiameter 42” Gross Capex $1.1bn

Baku-Tbilisi-Ceyhan PipelineFull capacity (2008) 1 mmbdLength 1768 kmDiameter 46/42/34” Gross Capex $3.9 bnFirst tanker departed 4th June 2006Current BTC export capacity 750 mbd

3000m

2000m

1000m

Sea Level

1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0

BTC Pipeline Route Profile (Distance in km)

AzerbaijanGeorgiaTurkey

Azerbaijan, Georgia, Turkey Pipelines Project

13

Istanbul - the big issue behind BTC

• Oil volumes shipped through Bosporus increasing every year (pipeline oil would have increased volume by 50%)

• Oil tanker traffic increasing as a percentage of total transits through Bosporus

Black Sea

Mediterranean Sea

Istanbul

Istanbul

14

Platforms

Central Azeri

Central Azeri

East AzeriEast Azeri

West AzeriWest Azeri

Shah Deniz TPG 500

Shah Deniz TPG 500

15

RoW ReinstatementRoW Reinstatement

The official inauguration of BTCThe official inauguration of BTC

Georgia Pump StationGeorgia Pump Station

BTC

Ceyhan Marine TerminalCeyhan Marine Terminal

RoW ReinstatementRoW Reinstatement

The official inauguration of BTC

The official inauguration of BTC

Georgia Pump StationGeorgia Pump Station

16

4th June 2006: First Tanker Loading at Ceyhan Terminal was successfully completed. “British Hawthorn” sailed away with 592,000

barrrels on board.

First Tanker Loading

THANK YOU

THANK YOU