BP in Azerbaijan Sustainability Report 2015 bp.com/caspian/report About our report This report covers the calendar year ending 31 December 2015. In some instances significant events from 2016 have been included. Unless otherwise specified, the The report is issued annually by text does not distinguish between BP Exploration (Caspian Sea) Limited the activities of BP p.l.c. and those in its capacities as operator and of its subsidiaries and affiliates. manager of the joint operating References in this report to ‘us’, ‘we’ company for the Azeri-Chirag- and ‘our’ relate to BP in Azerbaijan Deepwater Gunashli field, as manager unless otherwise stated. When we of The Baku-Tbilisi-Ceyhan Pipeline cite ‘BP in Azerbaijan’ we refer to Company and by BP Exploration operations in Azerbaijan only. If we (Shah Deniz) Limited in its capacities refer to ‘BP AGT’ we are including all as operator of the Shah Deniz field our activities in Azerbaijan, Georgia and as technical operator of The and Turkey. Specific references to ‘BP’ South Caucasus Pipeline Company. and the ‘BP group’ mean BP p.l.c., For this report each of these entities its subsidiaries and affiliates. has provided information relevant to All dollar amounts are in US dollars its project and statements applicable and if translated from other to its project. currencies reflect the exchange rate at the moment the funds were committed. All gas volumes are indicated in standard cubic metres or standard cubic feet. Cautionary statement BP in Azerbaijan Sustainability Report 2015 may contain forward-looking statements relating, in particular, to recoverable volumes and resources, capital, operating and other expenditures, and future projects. Actual results may differ from such statements depending on a variety of factors including supply and demand developments, pricing and operational issues and political, legal, fiscal, commercial and social circumstances. BP in Azerbaijan Sustainability Report 2015 bp.com/caspian/report Front cover imagery Rahman Rahmanov, Shah Deniz 2 topsides project manager talks to his colleague about the work at Amec-Tekfen-Azfen yard, where the two bridge linked platforms are being fabricated. Building a stronger, safer BP Overview Overview What’s inside? 2 Introduction 4 BP in Azerbaijan at a glance The regional president reflects on the Our organization at a glance, summary of BP in Azerbaijan Sustainability highlights of our activities in 2015 and our major achievements and challenges in Report 2015 covers our business touches upon our future plans. 2015. performance, environmental record and wider role in Focus areas Azerbaijan during 2015. It is our 6 Our operations Our operations 13th sustainability report and We are committed to delivering world-class 23 Environment reflects feedback we received operations and projects and to maintaining a We recognize that managing environmental sustainable presence in the Caspian region. impacts is an essential part of what it means about previous reports. to responsibly produce oil and gas. 13 Our people Our long-term success in Azerbaijan depends 27 Society on the skills, professionalism, experience and Our aim is to make a positive impact on the passion of our people. society, supported by an open dialogue with our stakeholders and leading to sustainable 19 Safety enterprise and community development. Our people We focus on maintaining safe, reliable and compliant operations and put safety and operational risk management at the heart of everything we do. 34 Five-year performance data Our key performance data covering areas Safety including production, safety, environment and social spend. Environment Society We have reviewed BP in Azerbaijan Sustainability Report 2015 in order to provide assurance to BP management that the data, statements and assertions made regarding the sustainability performance of BP in Azerbaijan are supported by evidence Our reporting or explanation. Our scope of work and conclusions can be found on page 35. Ernst & Young Introduction to the assurance process BP in Azerbaijan Sustainability Report 2015 1 Introduction by our regional president Our aim is to maintain a business that is resilient and sustainable in challenging times and continues to benefit all our stakeholders, including society at large. Gordon Birrell It is my great pleasure to introduce the in construction activities across all main The number of Azerbaijani senior level managers annual BP in Azerbaijan Sustainability Report. contracts and more than 80% of them were reached 275, which is almost 20% increase This is the 13th year we have produced this Azerbaijani nationals. The project is over 66% from the previous year. publication as part of our long-standing complete and remains on target. commitment to inform wider society about As an official partner of 2015 Baku European our activities in the country. Safety remains our top priority in whatever Games, we shared the nation’s excitement we do and we continued our good safety and passion for success. We sponsored six BP continued to operate the huge oil and track record in 2015. Our recordable injury Azerbaijani athletes as BP ambassadors; gas projects in Azerbaijan safely and reliably frequency dropped during the year remaining sponsored the Games Academy to develop in 2015 and these projects have significantly low by industry standards. We also managed youth from Azerbaijan and Europe for the contributed to the country and region’s to decrease our total vehicle accident rate by efficient delivery of major events; and economic growth. Azeri-Chirag-Deepwater 42%. At the same time we had several high supported an elite athlete development and Gunashli (ACG) – the largest oilfield in the potential events – an incident or near miss coaching programme for Azerbaijani athletes. Azerbaijan sector of the Caspian – continued which could have resulted in a health, safety, to produce efficiently, averaging a daily rate of security or environmental major incident – Across all of our achievements, milestones about 634 thousand barrels. during the year. We learned lessons from and challenges, our aim is to maintain a these events and are committed to keeping business that is resilient and sustainable in Working closely with the government our focus on safety. challenging times and continues to benefit all of Azerbaijan, the State Oil Company of our stakeholders, including society at large. Azerbaijan and other partners, we continued We have been privileged to operate major oil to focus on production performance towards and gas projects on behalf of Azerbaijan and I hope you find this report interesting and maximizing production from ACG. With being a good corporate citizen is an important useful. As always, it is shaped by what we future continual major investments in new part of this activity. We strive to bring tangible hear from our stakeholders. So we welcome technologies and facilities, we believe this and sustainable benefits to the society and your comments and suggestions. field can continue to produce as a world-class to communities where we work. Besides reservoir for many years. generating revenue, these benefits include creating jobs and building skills, providing Shah Deniz Stage 1 reliably delivered plateau opportunities for local enterprises and Thank you. production throughout 2015, with 9.9 billion supporting local development initiatives. standard cubic metres of gas and about 18.3 million barrels of condensate produced. Together with our co-venturers in Azerbaijan, Our technical expertise and ongoing we remain committed to supporting the maintenance of the facilities has helped development of the local market – through Shah Deniz provide a consistently secure and enterprise development and training reliable supply of gas to the region and in 2015 programmes and by increasing the local we achieved almost 100% plant reliability. content in our projects. In 2015, we signed Gordon Birrell new long-term contracts worth more than Regional president As a safe and reliable operator in the Caspian, $1 billion with 131 local companies. BP Azerbaijan-Georgia-Turkey region we have the unique experience and expertise 13 June 2016 to deliver large-scale complex projects in this We continued our co-operation with SOCAR in basin. In 2015 we made good progress on support of our commitment to develop national the Shah Deniz Stage 2 and South Caucasus employees involved in BP-operated projects. Pipeline Expansion projects. By the end of By the end of 2015, 88% of mid-level managers the year, about 20,000 people were involved working for BP in Azerbaijan were nationals. 2 BP in Azerbaijan Sustainability Report 2015 Overview Achievements and challenges Overview In this section we summarize the main achievements and challenges for BP in Azerbaijan in 2015. 2015 13 February Central Azeri platform marked the 10th anniversary of the start of production. 14 April The Milli Majlis (Parliament) of Azerbaijan ratified the shallow water Absheron peninsula production sharing agreement. 25 May Baku-Tbilisi-Ceyhan celebrated the 10th anniversary of the pipeline inauguration and line-fill commencement. 29 June Tanker loading process at Ceyhan Marine terminal jetty. South Caucasus Pipeline expansion project started mainline construction in Azerbaijan. Achievements Enterprise development Together with our co-venturers in Azerbaijan, Operations and business development we signed new long-term contracts with 3 September The Shah Deniz Stage 2 project made a very th 131 local companies in 2015, worth about 3000 tanker loaded with BTC oil sailed away good progress in 2015 with a number of $1.09 billion. See page 29. from the Ceyhan marine terminal in Turkey. milestones achieved ahead of schedule. See page 10. We successfully delivered three turnaround Challenges programmes on West Azeri, Chirag and Shah Safety Deniz. See page 12. Eight high potential incidents were recorded in The 2D seismic survey in the SWAP contract 2015. See page 20. area was safely completed in December 2015. See page 12. Employees The number of senior level national employees of BP in Azerbaijan reached 275, having grown by 20% over the year.