The Azerbaijan International Operating Company (AIOC), operated by BP, has begun oil production from the West Azeri platform – Azeri Project Phase 2, as part of the Azeri-Chirag-Gunashli (ACG) field development, in the Azerbaijan sector of the Caspian Sea.

The parties to the Azeri-Chirag-Gunashli (ACG) Production Sharing Agreement are: BP (operator - 34.1%), Unocal (10.3%), SOCAR (10%), INPEX (10.0%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon (5.6%), Itochu (3.9%), Amerada Hess (2.7%).

Located in approximately 118 meters of water 100km east of Baku, West Azeri (WA) production began from the first of three pre-drilled production wells on Friday 30th December. Transiting the subsea pipeline to shore, WA oil production reached Sangachal on Tuesday, the January 3rd. Production will increase through 2006 as the other pre-drilled wells are brought online, prior to further platform drilling commencing later this year. On plateau the WA facility will add 300 000 barrels per day in addition to the plateau rate of 340 000 barrels of oil per day from Central Azeri.

"The start up of West Azeri is as important as our achievement of our first oil from Central Azeri last year. It marks the culmination of our efforts to consistently meet our target of delivering a platform a year between now and 2008," said David Woodward, BP's Associate President in Azerbaijan. "The start up of WA will contribute to the rapidly increasing volumes of oil from ACG flowing into BTC once it becomes fully operational in spring this year "I am proud to say that we have delivered WA oil four months ahead of schedule and this is thanks to our ACG project and operations teams' excellent performance building on a track record of planning, construction and operations delivery in the Caspian Sea. On this important day for Azerbaijan, BP and our ACG partners, I would like to recognise the hard work of more than ten thousand people, mostly from Azerbaijan, who have consistently delivered outstanding performance on this project over the past three years. I would also like to congratulate the government, our partners, employees, all the contractors and suppliers and everyone involved, on this tremendous achievement."

The WA facilities comprise a 48-slot production, drilling and quarters (PDQ) platform and a 30" oil pipeline tie-in to the onshore Sangachal Terminal.

Oil from WA will be transported via the new 30" subsea pipeline to the onshore Sangachal Terminal, which has been expanded, including three new crude oil storage tanks.

Associated gas produced from WA will flow via in-field gas subsea pipelines to the Compression and Water Injection Platform (C&WP) installed in Central Azeri for re-injection into the reservoir for pressure maintenance or used as fuel. Surplus gas will be exported via an existing gas subsea pipeline into the Sangachal Terminal and onward via the new gas export pipeline into the Azerigas system for domestic use.

The ACG Production Sharing Agreement (PSA), signed in September 1994, covers the 30 year development of the Azeri-Chirag-Gunashli contract area. It is estimated that 5.4 billion barrels of oil will be recovered during the PSA period. The field is being developed in several phases: Chirag has been producing since 1997 as part of the Early Oil Project (EOP). This was followed by Azeri Project Phase 1 - Central Azeri production in early 2005. Successive phases include West Azeri, which started production in 2006, and East Azeri, scheduled to come on stream in 2007 as Azeri Project Phase 2, with ACG Phase 3 - Deepwater Gunashli, already sanctioned and expected to begin production in 2008.