| BP: “Challenge is to Expand BTC Capacity to 1.2 Million Barrels” |
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21/04/2009 17:22 (213 Day 14:37 minutes ago) | |||||
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The FINANCIAL -- Neil Dunn, General Manager for BP in Georgia, in an interview with The FINANCIAL, speaks about the latest developments of the company’s business and reviews the CSR activities that company BP Georgia has taken part in.
BP, one of the world’s largest energy companies, operating in Georgia since 1996, paid about USD 30 million in taxes to the Government of Georgia in 2008. Officials of company BP say that BP is one of the largest foreign investors in Georgia, having invested more than USD 1 billion into the country’s economy and with social investment commitments of more than USD 100 million up to 2010. Neil Dunn, General Manager for BP in Georgia, in an interview with The FINANCIAL, speaks about the latest developments of the company’s business and reviews the CSR activities that company BP Georgia has taken part in.
“The Baku-Tbilisi-Ceyhan (BTC) pipeline began fully operating in June 2006, delivering its first tanker of oil to global markets. With a total construction cost of USD 4 billion, the BTC pipeline is the first direct transportation link between the Caspian and the Mediterranean seas. At full capacity, it can deliver one million barrels of oil to market, generating important revenues for the Georgian government for decades to come,” BP officials note.
Q. Tell us about BTC/SCP achievements since they went into full operation in 2006?
A. BTC and SCP are two of our 3 major pipelines, including Baku-Supsa operated by BP in Georgia. BTC and SCP are in their fourth full year of operation.
Since mid 2006 when the BTC and SCP pipelines commenced operation, the amount of oil and gas transported to Europe and other world markets has increased significantly.
In 2008 Kazakh oil started its journey to the world markets via the BTC pipeline, thus marking the beginning of a new era. Oil flow through BTC increased in 2008, bringing around 700,000 barrels of oil per day to world markets and, for many days throughout the year, moving to the pipeline’s current capacity of one million barrels per day.
I am very pleased to say that the operating efficiency of the BTC pipeline in Georgia, measured by the extent to which we successfully transported the oil delivered through the Georgian section of the pipeline, averaged 99.8% in 2008. This is achieved by our workforce’s daily diligence and attention to detail in carrying out professional operations.
In 2008, 313 tanker loadings were completed from the marine oil terminal at Ceyhan.
Q. How did the Russian-Georgian conflict in August affect your company’s operations in Georgia?
A. During that conflict we saw minimal disruption to our operation. The reason was really the dedication and professionalism of our employees. Even if they had families affected by the situation across the country they stayed on post and made sure that the oil flowed safely through the pipelines even during the conflict. We had comprehensive emergency plans in place to make sure that the people were accounted for and worked safely. This process was driven by our local managers and appreciated and followed by staff here in Georgia.
Shortly after the conflict started, we made a decision to shut the Baku-Supsa line, as it is running very close to the then-conflict area. We started that line again in a very professional way in early November. Our plans worked very well and we are very proud of our people.
Q. What are the main challenges for the BTC project in 2009?
A. The challenge is to expand BTC capacity to 1.2 million barrels and maintain operating efficiency at the highest levels, while continuing safe and reliable pipeline operations, which is BP’s number one priority.
Q. What about the SCP project, how is it going?
A. We continue to supply vital gas through SCP to Georgia from the Shah Deniz field. The provision of this gas remains an important element in Georgia’s energy security. Throughput through the pipeline increased more than threefold in 2008 while delivering all of Georgia’s gas nominations.
Q. What is company BP’s success story for the year 2008, during the recession?
A. I am always pleased to talk about BP’s success story in Georgia and, in fact, it was only last week when I made a presentation at the Oil and Gas conference covering it in length. Our success story in Georgia is about safe and reliable operations. For the year as a whole, production throughput on the Baku-Tbilisi-Ceyhan pipeline (BTC) and South Caucasus Pipeline (SCP) increased and our operating efficiency on BTC/SCP averaged 99.8%, a remarkable achievement. We also successfully re-opened the Baku-Supsa pipeline following extensive repair works and a temporary shutdown in August. In March this year we loaded the 400th tanker at Supsa Terminal and our staff have managed to work 10 million hours in 10 years without any employee missing a day of work due to injury.
The past year has shown our ability to respond effectively and to manage turbulent periods; one test of what it means to be a sustainable business. We are working hard to make sure we remain a sustainable business in the years ahead.
Q. What kinds of investments were made by BP in Georgia last year?
A. Government statistics indicate that approximately 3% of foreign direct investment in Georgia came from BP and its partners in 2008. Our financial and economic impact in Georgia remains significant. We are an important contributor to national government revenues through the payment of taxes and transit fees.
Last year we paid about USD 30 million in taxes for the Government of Georgia; and spent about USD 75 million employing local Georgian companies in our operation. This is a big business and it’s important for Georgia.
Our operational expenditure in Georgia totalled USD 130.9 million in 2008 and Capital expenditure amounted to USD 74.2 million, the vast majority of which was spent on activities associated with BTC expansion and a few other construction projects.
Q. How many staff do you have employed in Georgia at the moment? Are they all Georgians?
A. We employ more than 500 people and we increased the proportion of Georgian nationals working in the business in Georgia to more than 90%. And I am pleased that Georgian nationals are now holding senior management positions in operations, finance, human resources, legal, security and external affairs.
Q. Have you reduced your number of staff due to the economic crisis?
A. No we have not. But in the context of the economic crisis, our business product prices have gone down by 70% in a short period of time; in just a few months. And now our goal is really to sustain a long term business in Georgia. To do that it takes the cooperation of all local Georgian companies and suppliers that we work with. We all invest together to expand our business and their business; and if we can make their business better and sustainable, that helps us.
Q. How much attention does your company pay to CSR activities?
A. I can say with confidence that I am proud about the responsible way we conduct our business. We believe that our business is only successful and sustainable if it is underpinned by ‘mutual advantage’ for the host government and private investors. Our focus will remain to help protect BP’s and the co-venturers’ asset base and overall investment by retaining the goodwill and supporting the work of key stakeholders - communities adjacent to the facilities, the NGO sector and the local business community.
Q. In what kind of CSR activities has your company taken part, in 2008 or more recently?
A. In the last 2 months we have announced 3 new initiatives. A Project Management College was established in Tbilisi to help early-mid career Georgians improve project management skills through accessing world class, specialist education. This effort is in partnership with the newly established Free University. The aim is to train and educate Georgians in project management; how to manage a project in a safe way, on time and within a budget. Effective project management skills will be beneficial to both the public and private sectors. This is a very intensive course lasting 14 months which will allow participants to earn a globally recognized project management certification through the U.S. institution George Washington University. We have made a three year commitment to this programme through significantly subsidizing the cost of the course to encourage participation. This is a fantastic opportunity for people to develop the skills necessary to help Georgia grow.
Another project is the new Energy Efficiency Programme, which was launched to help raise awareness within communities on energy saving options and to provide credits and grants to them to buy energy efficient products. ‘Energy Bus’ - a mobile information and demonstration unit will first visit Tbilisi districts and continue its journey to rural communities and major cities across the country. The Energy Bus will be roaming Georgia over the next three years and we have committed USD 1 million to subsidize the purchase of energy saving technologies by Georgian individuals.
We have also launched the ‘Eco-Awards’ programme, which ties Georgia’s natural resources and natural beauty to business and economical benefits. The Eco-Awards provides funding to breakthrough Georgian projects in the areas of agricultural business, eco tourism and the responsible management of Georgia’s protected areas.
Written By Tako Khelaia
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