By Mirsaid Ibrahimzade
The Southern Gas Corridor is a giant inititative of EU concerning a number of countries, which is expected to bring Azerbaijani gas to Europe, thus providing energy security. The SGC consists of large infrastructure projects, which in turn require huge investments.
Tha plans on investments for the current year have already been revealed.
Azerbaijan’s Southern Gas Corridor closed joint stock company (CJSC) plans to invest around $ 900 million in the relevant segments of the Southern Gas Corridor in 2019, Azerbaijan’s state oil company SOCAR told Trend.
The company said that in accordance with the financial obligations, the Southern Gas Corridor CJSC has invested a total of $9.6 billion in the projects as of 2018.
This is while the company’s investments in the projects in 2018 neared $1 billion, said SOCAR.
Earlier, the European Investment Bank (EIB) voted to hand out 1.5 billion euros, thus making it one of Europe’s largest ever loans, to one of the EU’s largest fossil fuel projects, the contentious Trans Adriatic Pipeline (TAP).
The loan approval follows the release of a study last week demonstrating that the Southern Gas Corridor – of which TAP is a part – could be as emissions-intensive or even more so than coal power.
Involvement of other financial institutions and stakeholders can not be forgotten. The European Bank for Reconstruction and Development (EBRD) already approved three loans for the Shah Deniz stage 2 gas field ($ 200 million, $ 250 million and $ 100 million) as well as a $ 500 million loan for TANAP and stated that its financial support to TAP could amount to 1.2 billion euros.
Further, on top of $ 250 million for Shah Deniz stage II (as part of a package with the EBRD and commercial banks), the Asian Development Bank (ADB) approved in December 2016 an additional $ 1 billion for the Shah Deniz stage 2 gas field. The Asian Infrastructure Investment Bank (AIIB) also approved a $ 600 million loan for TANAP at an unannounced extra-ordinary virtual Board meeting on December 21. (The AIIB’s project summary also states the combined EIB and EBRD support for TANAP as $ 2.1 billion, which suggests that, like the EIB, the EBRD is considering 1 billion euros for TANAP.)
In addition, the World Bank approved two $ 400 million loans for Turkey and Azerbaijan for TANAP. The World Bank’s Multilateral Investment Guarantee Agency (MIGA) approved a guarantee of up to $ 950 million for TANAP against the risk of non-honoring of a sovereign financial obligation.
The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian region to the European countries through Georgia and Turkey.
At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan's Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.
As part of the Stage 2 of the Shah Deniz development, the gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline.
Trans-Adriatic Pipeline (TAP) and Trans-Anatolian Natural Gas Pipeline (TANAP) have been recently connected on the Turkish-Greek border.
The launching ceremony of the first stage of the Southern Gas Corridor was held in Baku on May 29, 2018, while opening ceremony of TANAP was held on June 12, 2018 in the Turkish city of Eskisehir.
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