Saipem-led venture wins $300 million BP award in Azerbaijan

Italian contractor will operate specialist construction vessel at country's two largest offshore fields

A Saipem-led venture in Azerbaijan has secured a new Caspian subsea construction award from UK supermajor BP, according to the Itaian company.

The work will be carried out by the SCV Khankendi, a specialist vessel owned by the BP-led Shah Deniz consortium.

Launched in 2017 at a cost of about $380 million, with its hull strips built in South Korea and assembled in Baku, the vessel was designed specially for subsea construction at the second development phase of the Shah Deniz project in Azerbaijan’s Caspian sea area.

Saipem’s partners in the venture are Azeri-Italian players BOS Shelf and BOS Shelf International, which are involved in manufacturing steel structures and construction services.

BOS Shelf is an Azeri company founded by Star Gulf FZCO, a venture of Saipem and Azerbaijan's state oil and gas producer Socar.

The overall value of the services under the award is estimated at approximately $300 million, of which $250 million relate to Saipem’s share.

Saipem will operate SCV Khankendi and provide the crew to carry out marine activities at Shah Deniz and and the Azeri-Chirag-Gunashli (ACG) group of fields, which are also operated by BP.

Shah Deniz produces mostly gas, whereas ACG produces oil, although BP is working to confirm the possibility of commercialising gas resources from deep formations.

According to Saipem, the award includes engineering, procurement, construction and installation of subsea infrastructure and life-of-field services at the two assets.

The award has an initial duration of three years with the possibility of extension for two more years, Saipem said.

Ilhan Shaban, a partner at Baku-based energy consultancy Caspian Barrel, told Upstream that under the award, Saipem and its partners are expected focus on servicing the subsea gas production manifolds installed in about 600 metres of water at Shah Deniz.

SCV Khankendi can also operate a dive capsule, so subsea infrastructure can be reached quickly for inspection and repairs, he added.

Saipem has been operating in the Caspian since the 1990s. In 2016, it was assigned the operational management of the SCV Khankendi for offshore activities at Shah Deniz under another framework agreement, also signed with BP, the company said.

In April this year, BP started operations at ACG’s Azeri Central East (ACE) platform, the seventh oil producing platform installed at the field since first oil flowed in 1997.

Authorities in Baku are also waiting for the results of an exploration well at ACG.

BP is scheduled to drill a 4500-metre sidetrack well later this year from the existing A22 injector well into what is believed to be a major natural gas bearing formation.

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