AIOC kicks off Chirag Oil Project

Azerbaijan International Operating Co. (AIOC) has awarded $814 million in contracts for development of the Chirag Oil Project (COP) in the Caspian Sea.

Offshore staff

BAKU, Azerbaijan -- Azerbaijan International Operating Co. (AIOC) has awarded $814 million in contracts for development of the Chirag Oil Project (COP) in the Caspian Sea.

The project forms of the Azeri, Chirag, and deepwater portion of the Gunashli (ACG) field development. The contract awards follow sanctioning this March 2010 by the ACG Steering Committee of the Chirag Oil Project, to deliver: 

• A process, drilling, and quarters (PDQ) platform comprising a subsea template, fixed steel jacket, topsides, and associated equipment

• Subsea oil and gas pipelines and associated equipment.

The awards follow an 18-month bidding and negotiation process conducted by AIOC, based on experience gained from the previous ACG development projects. Awards went to the following:

1. BOS Shelf, a joint venture between Saipem and SOCAR's Baku Deepwater Jacket Factory (BDJF), will perform fabrication of the jacket and subsea template with associated pin piles and a riser support frame for the brownfield work on the Deepwater Gunashli production, compression, water injection, and utilities platform (PCWU) platform at the BDJF facility in Baku. The overall value is around $215 million.

2. The AMEC/Tekfen/Azfen (ATA) consortium will be responsible for fabrication, assembly, hook-up, and commissioning of the PDQ integrated deck, including the drilling facilities, at the Azfen yard in Baku. Contract value is close to $340 million.

3. Malaysian company Saipem Asia will transport and install the subsea template, this work valued at around $57 million. SOCAR's heavy lift vessel Derrick Barge Azerbaijan (DBA) will be involved.

4. Apply Leirvik Emtunga will engineer, procure, and construct the living quarters for around $22 million. Engineering work will start this year, with shipping of the living quarters from Sweden expected to begin during 3Q 2011. Assembly and commissioning of the module will be performed at the Azfen facility in Baku.

5. Kellogg Brown & Root won the $150-million contract for engineering of the offshore facilities. After completing engineering, work will continue through on site assistance in Baku.

6. KCA Deutag, a US/UK company, is responsible for engineering of the drilling facilities, valued at around $30 million. Again, post-engineering, work will continue through on site assistance in Baku.

AIOC says the contracts show its commitment to use Azerbaijan’s local resources where possible. The project should involve around 9 million manhours during construction work, with 90% undertaken in Azerbaijan. Of this, around 80% will be performed by the local workforce. AIOC is also encouraging its contractors to maximize use of local subcontractors, and expects over 30% of the total COP spend to be distributed in Azerbaijan.

Other contracts for this project are being finalized, including award of the subsea pipeline installation and diving works, and transportation and installation of the jacket and topsides.

The Chirag Oil Project is a $6 billion development intended to increase oil production and to recover a further 360 MMbbl from the ACG field through a new production facility installed between the Deepwater Gunashli and Chirag platforms.

ACG participating interests are: BP (operator, 34.1%), Chevron (10.2%), SOCAR (10%), INPEX (10%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon (5.6%), ITOCHU (3.9%), and Hess (2.7%).


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