The initial stage of development of the ACG contract area located offshore Azerbaijan in the Caspian Sea, the Early Oil Project, was financed by IFC and EBRD in 1998 and is currently producing approximately 140,000 barrels of oil per day.
ACG Phase 1 is the first phase of the full field development of oil and associated gas reserves in the ACG contract area. The ACG Phase 1 project comprises construction of an offshore production processing facility, a drilling and quarters platform, a bridge linked compression platform, and related facilities, and expansion of existing onshore production facilities in Azerbaijan. EBRD's independent reserves consultant for the ACG Phase 1 Project estimates that ACG Phase 1 project production will peak at 375,000 barrels of oil per day in 2007.
This project has the potential, subject to appropriate management of the associated revenues, to boost economic growth and assist in reducing poverty in Azerbaijan, one of the region's poorest countries.
In addition to the anticipated monetary benefits, the development of the ACG Phase1 field will have substantial transition impact on Azerbaijan directly, and the region indirectly, through:
1. The establishment of new standards of transparency through the disclosure of: (a) payments to the Government; and (b) project documents such as the Azeri Chirag and deepwater Gunashli Production Sharing Agreement (in English, and shortly in local languages)
2. The application of high international environmental and technical standards, high health and safety standards, international principles of good corporate governance and respect for human rights
3. The project will, indirectly, boost economic cooperation between Azerbaijan, Georgia and Turkey. It will help to strengthen the economic ties between the Caspian region and its main markets in Europe
4. Increased backward linkages through the inclusion of local suppliers and transfer of skills through the employment of local labour.
At present, the following are the Participating Production Sharing Agreement (PSA) Contracting Parties. Special purpose financing affiliates of each of these companies will be the Borrowers under the financing of the ACG Phase 1 Project:
Amerada Hess (ACG) Limited
Amoco Caspian Sea Finance Limited
Statoil Apsheron a.s.
Unocal Khazar, Lt
A 12 year A loan of up to US$ 30.5 million and a 10 year B loan of up to US$ 30.5 million. The Project will be co-financed with IFC who will be providing similar amounts.
US$ 3.2 billion
The project was screened A/1 requiring an EIA. The Client has carried out extensive Environmental and Social Impact Assessment. All activities associated with the Phase 1 development were assessed including normal, abnormal and accidental activities. A total of 84 routine and non-routine activities were assessed for the potential to interact with 23 identified environmental receptors. No routine activities were assessed as having the potential to result in environmental impacts of "critical" significance due to effective mitigation during early project design.
A number of issues were considered in particular detail, including flaring and greenhouse gas emissions, discharge of drilling cuttings and fluids, biodiversity and marine impacts, accidental oil spills, loss of grazing land and access to subsistence fishing. Additional studies include marine dispersion modelling, oil spill modelling, and socio-economic consultation and investment program development. These studies enabled management and mitigation measures to be developed along with the project team to reduce the risk or consequence of the environmental impact to manageable and acceptable levels.
A key element throughout the Phase 1ESIA process has been the on-going interaction between the environmental and engineering design team with the objective of avoiding or minimising environmental impacts. Impacts requiring continuing management through the project construction and operational phases have been outlined in a Commitments Register within the framework of an Environmental and Social Action Plan, listing each commitment and its source, assigning responsibility for fulfilling the commitment, tracking the commitment's status and creating a commitment "implementation trail" showing where the commitment fits into the Environment and Social Management System and project management. Commitments are subdivided into two main groups: mitigation commitments, which relate to measures that will be taken to directly mitigate or manage those impacts which could not be prevented through design (e.g. air quality, landscape, etc.) and additionality commitments, which relate to measures over and above any mitigation undertaken by the project and provide benefits to local communities and environment (e.g. Community and Environmental Investment Programmes).
The ESIA, ESAP and other related documents can be viewed at the project website
or EBRD website
In connection with its activities in Azerbaijan, EBRD has secured a € 220.000 TC to assist the Azeri Government with the development of a National Oil Spill Contingency Plan, which would help minimise risks to the marine and coastal environment of Azerbaijan and the Caspian Sea region.
BP Exploration (Caspian Sea) Ltd.
2 Neftchilar Prospekti (Bailov)
Tel: +994 12 979 000
Fax: +994 12 979 602
For business opportunities or procurement, contact the client company.
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Text of the PIP