Azernews.Az

By Gulgiz Dadashova

The Trans Adriatic Pipeline (TAP) is selected by the Shah Deniz Consortium, engaged in the development of Azerbaijani gas condensate field Shah Deniz in the Caspian Sea, as a route for transporting its gas to European markets.

The Consortium confirmed that the TAP has been selected to transport Shah Deniz -2 gas to Europe at a press conference on Friday.

The TAP project with initial capacity of 10 billion cubic meters of gas per year will be connected to the Trans Anatolian gas pipeline (TANAP), which envisages the construction of a pipeline from the eastern border of Turkey to the country's western border to supply gas from the Shah Deniz field to European markets through Turkey.

BP President for Azerbaijan, Georgia and Turkey Gordon Birrell said that TAP is an important project.

He said President of Azerbaijan Ilham Aliyev and President of the European Commission Jose Manuel Barroso signed a document, which confirmed the possibility of transporting the Azerbaijani gas to Europe.

"Achievement of important results in this direction was confirmed once again a few days ago in Brussels. We see how Azerbaijan is becoming a European supplier of gas," Birrell said.

He went on to say that Azerbaijan has demonstrated itself as a reliable partner by pumping 2.3 billion barrels of oil via the Baku-Tbilisi-Ceyhan oil pipeline.

"In the last two years, we have been considering various options for pipelines and have made the right choice. We have been looking within two years for various aspects, including technical, financial and security issues as well as the possibility of extension. With great confidence we start acting towards the implementation of the Southern Gas Corridor," Birrell said.

There will be an increase in gas production from other fields in Azerbaijan in the future, which will cause a need for new interconnectors and new infrastructure, he said.
According to him, some $40 billion will be invested in the realization of Shah Deniz-2 and enabling gas deliveries to Europe.

Sharing his views on the decision, President of SOCAR (State Oil Company of Azerbaijan) Rovnag Abdullayev a serious step has been taken for the delivery of Azerbaijani gas to Europe.

According to Abdullayev, Europe is an important market for gas supplies. The decision on the choice of a route for the Azerbaijani gas supplies to Europe has become the first one in the way of entering the new market. However, it is not limited to the choice of the TAP project.

"The Shah Deniz Consortium is working on the possibility of gas supplies to Bulgaria. Important interconnectors in Europe are also being considered. Besides gas from 'Shah Deniz' we are seeing a second wave: for example, the deep laying gas on the of Azeri-Chirag-Guneshli block and the gas from the prospective 'Shafaq-Asiman' [...] we will witness the realization of the Nabucco project after the gas opportunities will be increased. Everything is not limited to TAP gas pipeline. We still need new export routes," Abdullayev said.

Energy Minister Natig Aliyev, in turn, said that the selection of the TAP as the route to transport Azerbaijani gas to European markets will create better conditions for investment
According to him, the decision on the route will create conditions to attract significant investment in Azerbaijan, Georgia and Turkey in the first instance.

"TAP has received the support of the states. According to the participants of the TAP project, Italy is not the final destination for gas deliveries. It is planned to access Austria and other countries through Italy," Aliyev said.

Speaking at the event, U.S. Ambassador to Azerbaijan Richard Morningstar voiced the support of the United States to the TAP project.

"I unequivocally say that the U.S. supports the TAP project. This is not the end of the process. It is possible that the Nabucco project will be implemented in the future, and that depends on the volume of gas," Morningstar said.

He said that the selected gas pipeline will ensure the energy security of Azerbaijan and Europe.

Managing Director at TAP Kjetil Tungland highly appraised the decision saying that this is the first and important step in opening up the Southern Gas Corridor.

"We look ahead, the Southern Gas Corridor will have a major role to play in Europe's energy security and ensuring the diversification of gas supplies to Western and South Eastern European markets," he said in the stamen released today.

He said that he is impressed with the results TAP has achieved.

"Over the next few months, we will continue to work hard with the Shah Deniz Consortium to ensure that they are able to take a successful final investment decision later this year. Finally, I would like to conclude by taking this opportunity to sincerely thank all those who have supported TAP over the past number of years in enabling this historic and geo-strategic project to be selected and to commend the Shah Deniz Consortium for carrying out a fair and transparent selection process."

The European Commission welcomed today's final selection of the pipeline delivering Azeri gas to Europe.

EU Commission President José Manuel Barroso said this is a shared success for Europe and a milestone in strengthening the energy security of our Union.

"I am confident that today's decision, which builds on the strategic Joint Declaration I signed with President Aliyev of Azerbaijan in January 2011, will provide further momentum to the full and rapid realization of the entire Southern Gas Corridor as a direct and dedicated link from the Caspian Sea to the European Union, which should be expanded over time," he said.

EU Energy Commissioner Günther H. Oettinger said: "We have a definite commitment from Azerbaijan that gas will be directly delivered to Europe through a new dedicated gas pipeline system. Whether the system consists of two gas pipelines - TANAP and TAP - or one single pipeline as earlier projects had foreseen - does not make any difference in terms of energy security. We now have a new partner for gas, and I am confident that we will receive more gas in the future."

Commenting on the decision, Nabucco Gas Pipeline International GmbH announced that it regrets that the new gas highway to Europe as planned will not be realized for the 10 bcm of gas from the Shah Deniz fields.

"The need for diversification remains a challenge for the European market, in particular in the countries of Central and South Eastern Europe. We remain convinced that the Nabucco route offers the only possibility to answer these needs. Nabucco is confident of developing opportunities based on alternative gas sources," the statement reads.
Nabucco reported that its shareholders will now discuss the next steps.

The selection of TAP by Shah Deniz Consortium confirms that TAP is the economically and technically most advanced pipeline project for the transportation of Shah Deniz gas to Europe.

The past and continuing support of the European Commission and the various national governments underpins the importance of TAP for the European energy agenda.
TAP's routing can facilitate gas supply to several South Easter n European countries, including Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, Croatia and others.

TAP's landfall in Italy, the third largest gas market in Europe, provides multiple opportunities for further transport of Caspian natural gas to some of the largest European markets such as Germany, France, the UK, Switzerland and Austria.

Designed to expand the capacity from 10 to 20 bcm per year, TAP will open up the so-called Southern Gas Corridor, enhancing Europe's energy security by providing a new source of gas.

TAP's shareholders are Axpo of Switzerland (42.5%), Norway's Statoil (42.5%) and E.ON of Germany (15%). Shah Deniz Consortium members BP, SOCAR and Total each have options to purchase shares in TAP which if exercised in full would give them a total ownership of 50% of TAP. It is expected that the options will be exercised following selection of TAP as the gas transportation route to Europe. Currently, BP, SOCAR and Total are participating in the funding of the development of the TAP project.

Earlier experts said that the commercial component will play an important role in the selection of a final route for transportation of Azerbaijani gas to Europe. Furthermore, the selected market should be able to offer the exporters long-term security of demand for a period of at least 20-25 years.

In this context, the first advantage of the TAP project was the higher gas price on the Italian hub by 20 percent compared with the price in Western Europe.

The opening of the Southern Corridor will allow for the Caspian gas to eventually reach several countries in Europe, in particular in Southeast Europe.

The International Energy Agency forecasts that EU gas demand will increase from currently 526 billion cubic meters to 622 billion cubic meters by 2030. Also, the EU's Energy Roadmap 2050 forecasts that gas imports will raise, notably due to a decline of home production. This additional demand should be covered by new, additional gas suppliers.