TAP can have positive effect on gas prices, says country manager
By Narmina Mammadova
The Trans Adriatic Pipeline (TAP), which envisages transportation of Azerbaijani gas to Europe, can have a positive effect on gas prices, TAP’s Country Manager for Albania Michele Elia said.
TAP, a project worth a total of 4.5 billion euros, is one of the most important infrastructure projects in the world, Elia said, according to a message from TAP AG consortium.
Elia pointed out that TAP project, which is now more than 80 percent complete, has ensured the creation of new jobs, investments in the countries through which it runs.
Unlike other large infrastructure projects that require public funding and have a high impact on the territory, TAP is financed entirely with private capital and is almost invisible, he added.
"TAP can also have a positive effect on prices. It is a simple law of economics: if there is only one tomato seller in the market, it will set the price. But if another seller comes with a more competitive price, it is good for the consumer,” noted Elia.
Azerbaijan is implementing a large-scale gas project, the Southern Gas Corridor (SGC), which provides for the supply of gas from the giant Shah Deniz field to Europe.
The Southern Gas Corridor is one of the priority projects for the EU and envisages the transportation of 10 billion cubic meters of Azerbaijani gas from the Caspian region through Georgia and Turkey to Europe. Gas from this field will go via the expanded South Caucasus Pipeline to the Turkish border and further to Europe through the Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) pipelines.
On May 29, 2018 Baku hosted the launch ceremony of the first phase of the Southern Gas Corridor project, and on June 12, 2018 the opening ceremony of TANAP pipeline was held in the Turkish province of Eskisehir with the participation of the presidents of Azerbaijan - Ilham Aliyev, Turkey - Recep Tayyip Erdogan, Ukraine - Petro Poroshenko and Serbia - Alexander Vucic.
The implementation of SGC will affect gas supplies through the South Caucasus Pipeline (Baku-Tbilisi-Erzurum). As a result, though, in 2017 the share of this pipeline accounted for only a third of all gas transportation, while by 2023 this figure will exceed 45 percent.
The volume of gas transportation via Baku-Tbilisi-Erzurum in 2018 is expected to be at 6.5 million tons (31.25 percent of transportation via main pipelines), in 2019 - eight million tons (34.04 percent), in 2020 - 11.6 million tons (40.9 percent), in 2021 - 15.8 million tons (46.75 percent) and in 2022 - 16.6 million tons (46 percent).
TANAP and TAP are the parts of the Southern Gas Corridor.
The initial capacity of TANAP is expected to be 16 billion cubic meters of gas per year. About six billion cubic meters will be supplied to Turkey, and the rest to Europe. After completion of the TAP, the gas will reach Europe in early 2020.
The share distribution in TANAP is as follows: Southern Gas Corridor CJSC - 51 percent, SOCAR Turkey Enerji - 7 percent, Botas - 30 percent, and BP - 12 percent.
TAP project, worth 4.5 billion euros, has already attracted 1.5 billion euros from the European Investment Bank (EIB), which approved the loan in early February 2018. The pipeline will connect to the Trans Anatolian Natural Gas Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south.
Connecting with the Trans-Anatolian Natural Gas Pipeline (TANAP) at the Greek-Turkish border, TAP will cross Northern Greece, Albania and the Adriatic Sea before coming ashore in Southern Italy to connect to the Italian natural gas network.
Once built, TAP will offer a direct and cost-effective transportation route opening up the vital Southern Gas Corridor, a 3,500-kilometer long gas value chain stretching from the Caspian Sea to Europe. Around 82 percent of the TAP project has already been completed.
As of November 14, 2018, TAP signed a Letter of Intent, marking the final stages of negotiation of the Maintenance Agreement talks between TAP and Albgaz Sh.a and Snam S.p.a. – a joint venture that will establish a special purpose entity to act as the maintenance service provider for the Trans Adriatic Pipeline on the territory of Albania.
The TAP project is one of the strategic objectives of the EU in the energy security and diversification of energy sources, chosen as the shortest and direct way to export natural gas from Azerbaijan to the European markets.
TAP shareholders include BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagas (16 percent) and Axpo (5 percent).
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