Phase 1 Project

completed

ACG Development─ Phase 1 Project DescriptionThe Azeri Chirag deepwater Gunashli (ACG) fields operated by BP Exploration (Caspian Sea) Limited contain an estimated 5.4 billion bbls of recoverable crude oil reserves. They will be developed in four separate phases, the first of which, the Early Oil project, was financed by IFC and EBRD in 1998 and is producing approximately 140,000 barrels of oil a day. The second stage, called Phase 1, is currently being considered for separate financing by IFC and EBRD although the financing of the Phase 1 project will be conducted in parallel with the BTC project. Phase 2 was sanctioned in September of 2002, while Phase 3 is in the project development stage. Following the completion of all of the phases in 2009, the ACG field peak production of crude is expected to be over one million barrels of oil per day based on proved plus probable reserve estimates. BTC Project Description:The Baku-Tbilisi-Ceyhan, or BTC, pipeline will transport up to one million barrels of oil per day (bpd) of crude oil primarily from the ACG field. The 1,760 km pipeline, which starts at the Sangachal Terminal near Baku in Azerbaijan, passes through Georgia and ends at a new marine terminal at Ceyhan on the Mediterranean coast in Turkey, is due to become operational in early 2005.ACG production is currently shipped primarily through the Western Route Export Pipeline, (WREP) completed as part of the Early Oil project, ending in Supsa, Georgia; however, the current capacity of this route is approximately 150,000 bpd. In addition, the Northern Route pipeline to Novorossiysk, Russia has a capacity of 115,000 bpd. The BTC pipeline became a necessity because of current constraints on capacity that would limit the ability to bring ACG crude to market. Early conceptual development of the project took into account the need for a dedicated export route for the ACG field that would not require the shipment of Caspian oil through the Bosphorus Straits thereby significantly reducing environmental risk.