SOCAR sees TANAP pipeline cost rising by $3 bln
By Nigar Orujova
The cost of Trans-Anatolian gas pipeline (TANAP) -- which will carry Azerbaijan's natural gas across Turkey to Europe -- will be increased by $3 billion, according to Kenan Yavuz, the head of SOCAR Turkey Energy, a subsidiary of Azerbaijani state energy firm SOCAR.
Due to some changes in the final route, the cost of the project will increase to $10 billion, Turkey's Zaman newspaper quoted Yavuz as saying on Friday.
TANAP project envisages construction of a pipeline from the eastern border of Turkey to the country's western border to supply gas from Azerbaijani Shah Deniz field in the Caspian Sea to Europe through Turkey. Initial capacity of the pipeline is expected to be 16 billion cubic meters a year. About 6 billion cubic meters will be delivered to Turkey, while the rest will go to European markets.
According to Yavuz, no matter what the TANAP project cost is, its implementation is very important for Turkey because thanks to the project the country will receive gas at a more affordable price.
As a result, Azerbaijani investments in Turkey will increase from the expected $17 billion to $19-$20 billion from 2008 to 2018.
SOCAR partners on the Shah Deniz gas development project previously expressed an interest in participating in the TANAP project. According to preliminary data, the partners intend to distribute a 29 percent share in TANAP. Statoil and BP would receive 12 percent each and Total would get 5 percent.
Presently, 80 percent in TANAP is owned by SOCAR, while a 20 percent stake is held by Turkish BOTAS and TPAO. According to preliminary data, the project partners intend to distribute a 29 percent stake in TANAP as follows: Statoil and BP - 12 percent each, and Total with 5 percent. SOCAR intends to retain 51 percent of equity in the project.
According to the 2013 budget of the Azerbaijani state oil fund SOFAZ, financing of the share of Azerbaijan in the TANAP project amounts to over 86 million manats (about $110 million).
Ali Hasanov, the Presidential Administration's head of social and political affairs, said late last year that by 2025 the export of Azerbaijani gas is expected to increase to 40-50 billion cubic meters, and most of the volume will be transported to Europe and Turkey.
"With the launch of TANAP transnational gas pipeline, which is ranked as one of the main projects for export of energy resources...Azerbaijan with its natural gas reserves will ensure its direct involvement in the European energy market," Hasanov noted in December.
He said Azerbaijan has become an important partner in ensuring the energy security of Europe. The share of Azerbaijani oil in the energy balance of a number of EU member states is 35-40 percent.
"Once the Trans-Anatolian pipeline is launched, Azerbaijan with its 80-percent share will turn into the most important player in the European gas market," Hasanov said.
Several countries have expressed their intention to participate in TANAP and their joining the project as partners is possible.