The news you possibly missed: TAP pipeline up and running

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Baku, 20 November 2020 –

By Shahmar Hajiev

The Caspian region with its rich hydrocarbon resources has always attracted and continues to attract international attention. Azerbaijan initiated the Southern Gas Corridor (SGC) to export natural gas from the Caspian Sea to the European gas markets.

On 15 November 2020, the Trans Adriatic Pipeline (TAP) which is the final section of the SGC, was completed and began commercial operations.

It should be underlined that all segments of the SGC are significant energy infrastructure projects, which open new opportunities not only for Azerbaijan, but also for the Caspian region to export natural gas to the European energy markets.

The TAP pipeline, with an estimated cost of €4.5 billion, is a new inter-regional export gas pipeline for bringing gas to the European consumers from the Shah Deniz 2 offshore gas field in the Caspian Sea (SD2).

The pipeline starts at the Turkish-Greek border at Kipoi, connecting Greece, Albania and ending in the final destination in the southern part of Italy. The initial capacity of the pipeline is 10 bcm/year of gas, and a future expansion will increase the pipeline’s throughput capacity up to 20 bcm/year.

The pipeline will deliver 8 bcm/year of gas to Italy, and the remaining 2 bcm/year of gas to Greece and Bulgaria. The shareholders of TAP are BP (20%), Azerbaij’an’s SOCAR (20%), Italy’s Snam (20%), Belgium’s Fluxys (19%), Spain’s Enagas (16%) and Swiss-based Axpo (5%).

As one can see, TAP is a mega energy project, which involves several countries, international energy companies, as well as financial institutions such as ADB, EBRD and EIB.

The TAP project became a reality due to the cooperation of all involved actors. It is very important to highlight the role of the Southern Gas Corridor Advisory Council, which was established in 2013 by the President of the Republic of Azerbaijan.

One of the main aims of the Advisory Council was efficient implementation of all measures related to transportation of Azerbaijani natural gas to Europe along the Southern Gas Corridor. There were six Ministerial Meetings of the Southern Gas Corridor Advisory Council, where all important aspects and challenges of the mega-project were discussed between involved parties.

On 28 February 2020, many countries, energy companies and financial institutions participated at the 6th Ministerial Meeting of Southern Gas Corridor Advisory Council in Baku.

It should be specially underlined that the Southern Gas Corridor Advisory Council was a very important step towards the future cooperation between the countries involved.

The European Union is interested in natural gas supplies from the Caspian region, and Turkmenistan-EU energy discussions are always high on the agenda. To this end, the SGC project has a strategic value for the whole Eurasian continent.

2020 was a remarkable year for the TAP pipeline because in October 2020, TAP was filled with natural gas from the Greek-Turkish border up to the pipeline receiving terminal in Southern Italy.

Finally, on 15 November the gas transportation system via Greece, Albania, the Adriatic Sea and Italy began commercial operations. It means that the first natural gas from SD2 was supplied to Europe.

The SGC with all its sections is a very important inter-regional energy project and a great achievement for Azerbaijan. The SGC widened economic, political and security cooperation with Turkey, as well as established strong relationships with European partners.

From a geopolitical standpoint, TAP is the first pipeline supplying Caspian gas to Europe. Taking into account the volatility in oil markets, it was highly important for the country to be a net gas exporter.

TAP demonstrated cooperation and integration between Azerbaijan, Turkey and European countries. In addition, the pipeline contributes to economic, political as well as energy security of all involved actors.

For Turkey, the realization of the SGC was very important as well. The Turkish leg of the SGC – the Trans-Anatolian Natural Gas Pipeline (TANAP) diversified the Turkish gas sources.

The SCG has already started 6 bcm of natural gas delivery for the Turkish gas market. For the period between January-July 2020, 6.3 bcm of natural gas was supplied, and as of March 2020, Azerbaijan ranked first place in the Turkish gas market with 23.45% of the country’s gas supply.

As one can see, Turkey managed to decrease its high gas supply dependence using Azerbaijani gas. In addition, being one of the key actors of the SGC, Turkey is interested in becoming an energy hub to support EU energy security. The energy cooperation between Turkey and Europe will contribute positively to mutual cooperation and dialogue.

For Europe, first of all, TAP pipeline is a diversification of gas sources and supply routes. Azerbaijani gas supplies will reach South Eastern, Central and Western Europe, and those regions have high gas dependence on a few suppliers.

In general, analysis of the European of gas markets shows that EU gas consumption will be increased, therefore 10 bcm/year of gas volume is important for the European consumers. Additionally, the European Green Deal aims to reduce greenhouse gas emissions, and the Pact indicates natural gas as one of the main energy sources for the future.

Another important point is the role of gas interconnectors, because the EU is interested in developing natural gas interconnectors and invests in them. TAP pipeline creates favorable conditions for countries to support energy security by developing gas interconnectors.

For instance, the Gas Interconnector Greece – Bulgaria (IGB) connects Greece to Bulgaria. For south-east Europe, TAP can provide an exit point to the planned Ionian Adriatic Pipeline (IAP) to link to the markets in Croatia, Albania, Montenegro, and Bosnia and Herzegovina.

Now, it is very obvious that TAP is a direct and cost-effective transportation route to south-east European countries and beyond.

Finally, Azerbaijan managed to focus on strategic objectives by implementing efficient energy policy, and the potential of the country to export natural gas to European consumers is growing year by year.

Neither the COVID-19 pandemic nor the Nagorno-Karabakh war could stop Azerbaijan from finalizing the TAP project, and the first Azerbaijani gas had been already supplied to European consumers. It is Azerbaijan’s great achievement to complete all sections of the Southern Gas Corridor project, which support economic integration and energy security.

Shahmar Hajiev is a leading-expert at the Center of Analysis of International Relations of Azerbaijan.

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