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Azerbaijan's TANAP ratification 'to open Southern Gas Corridor'

28 November 2012 09:48 (UTC+04:00)
Azerbaijan's TANAP ratification 'to open Southern Gas Corridor'

By Seymur Aliyev

The Azerbaijani parliament's decision to ratify the Trans-Anatolian gas pipeline (TANAP) agreement shows the concrete determination of the country to bring its gas to Europe, EU Energy Commissioner Gunther Oettinger said in a statement released by the EU Delegation in Baku.

"This pipeline will mean that gas is brought to Europe's border, to then freely circulate within the European Union. It is a pleasure to welcome Azerbaijan, and more especially SOCAR [the Azerbaijani state energy firm], to the European Union's energy market," Oettinger said.

Last week the Azerbaijani parliament ratified the agreement on the construction of the TANAP pipeline, signed by the governments of Azerbaijan and Turkey.

The TANAP project envisages the construction of a gas pipeline from Turkey's eastern border to the western border to transport gas from Azerbaijan's giant Shah Deniz field in the Caspian Sea to European markets through Turkey.

Azerbaijan's SOCAR owns 80 percent in the TANAP project, while Turkey's BOTAS holds the remaining 20 percent.

Initial capacity of TANAP is expected to be 16 billion cubic meters a year. Around 6 billion cubic meters will be delivered to Turkey, while the rest will be transported to Europe.

According to preliminary estimates, the cost of the gas link will be around $7 billion. The construction of the pipeline is scheduled to begin in 2014 and finish in 2018.

'Vital step'

Trans Adriatic Pipeline (TAP) and Nabucco -- the two rival projects for transporting Azerbaijani gas from the Shah Deniz field further to European markets -- welcomed the parliament's decision on TANAP, calling it an 'important' and 'vital' step.

Currently, the Shah Deniz consortium considers these two options to deliver its gas to Europe. The final decision on a pipeline route will be made in 2013.

Hailing the Azerbaijani parliament's ratification of the TANAP agreement, a TAP official said on Wednesday that "it is an important step forward in the development of the Southern Gas Corridor", referring to a planned series of links that aim to reduce European countries' dependence on Russian gas imports.

"TAP continues a regular and positive dialogue with TANAP with regards to technical cooperation," Lisa Givert, Head of Communications at the TAP project, told the Baku-based Trend news agency.

The spokesman for Nabucco Gas Pipeline International, the Nabucco pipeline consortium, described the Azerbaijani parliament's approval of the TANAP agreement as a vital step to open the Southern Gas Corridor.

"Nabucco is fully transparent to TANAP and opened its database to enable a swift cooperation," Christian Dolezal told Trend.

The TAP project is designed to transport gas from the resource-rich Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into western Europe. TAP's shareholders are EGL of Switzerland (42.5 percent), Norway's Statoil (42.5 percent) and E.ON Ruhrgas of Germany (15 percent).

Nabucco West is a short-cut version of the Nabucco project, which envisions construction of a pipeline from the Turkish-Bulgarian border to Austria. The project's current shareholders are Bulgarian Energy Holding, Romanian Transgaz, Turkish Botas, Austrian OMV, German RWE and Hungary's FGSZ, each holding 16.67 percent share.

'TANAP to become reality'

Meanwhile, SOCAR Deputy Vice-President Vitaliy Baylarbayov said Azerbaijan and Turkey will do their best for the Trans-Anatolian gas pipeline system to be created.

"Turkey and Azerbaijan will do everything to ensure that this pipeline becomes a reality because Azerbaijan's gas reserves cannot be developed without a dedicated pipeline," Bloomberg reported with the reference to Baylarbayov.

He said that Statoil, BP and Total, which are SOCAR's partners in the project of developing the Shah Deniz field, are yet to agree to buy a stake in TANAP.

"The most important thing is to realize that no matter whether they join the project or not, it will not in any manner delay the implementation of TANAP," Baylarbayov said.

SOCAR partners on the Shah Deniz field development have voiced their preliminary intentions to acquire a stake in the TANAP project.

According to preliminary data, the partners intend to distribute a 29 percent share in TANAP as follows: Statoil and BP are to receive 12 per cent each and Total would get 5 percent.

According to the head of Commerzbank's office in Baku Johann Engbrecht, Germany's second biggest lender may also participate in financing projects to transport Azerbaijani gas to Europe.

"We will be ready to participate in financing the Trans-Anatolian gas pipeline and other projects on Azerbaijani gas transportation in case of a need for investments," he said last week. "However, the issue is still to be discussed."

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