EBRD Approves Big Loan for TAP
The European Bank for Reconstruction and Development (EBRD) said July 4 that its board approved an up-to-€500mn ($582mn) loan that day for the Trans Adriatic Pipeline (TAP), an EU priority project.
The 878-km pipeline will start at the Greek/Turkish border, cross Albania and, after passing under the Adriatic Sea, end in southern Italy. It constitutes the final leg of the Southern Gas Corridor and will transport gas from the Caspian region to Europe, starting with Azeri gas from the Shah Deniz phase 2 project from about mid-2020. However TAP faces political hurdles from the new government in Rome.
With an initial annual capacity of 10bn m3/yr, TAP will "make a significant contribution to the diversification of Europe’s energy supply," said EBRD.
It also insisted that it will achieve significant CO2 reductions by providing a cleaner fuel, as compared to coal; that though contrasts with the findings of a non-governmental organisation released this January.
Asked why the loan is "up to" €500mn, a EBRD spokesperson replied that the total loan will include a syndicated portion, which has been known about since the project was first considered years ago, but which is currently not being disclosed for commercial reasons because it is not final. The final amount of EBRD loan would be confirmed "in due course," she added.
TAP's total project cost is €4.5bn: the European Investment Bank (EIB) earlier this year approved TAP’s eligibility for a €1.5bn loan; contributions from the export credit agencies of France, Germany and Italy are under consideration. TAP will connect in Turkey to the Trans Anatolian Pipeline (Tanap) for which the EBRD approved a €500mn loan last October, as did the EIB this March for a €932mn ($1.15bn) loan.
At its end point in Italy, TAP will connect to the Italian natural gas network and thence the wider European gas system. But that's where problems may occur. The new Italian coalition government of two populist political parties has said it will review its decision to approve TAP. Given the project's strategic relevance to the EU as a whole, it will face pressure from other countries not to derail the project.
The Southern Gas Corridor value chain has a total estimated cost of $40bn and includes gas infrastructure investments into a 3,500 km network of pipelines crossing six countries. The key components are the Shah Deniz offshore gas field in Azerbaijan, the Southern Caucasus Pipeline in Azerbaijan and Georgia, Tanap in Turkey and TAP. Iinauguration of Tanap took place in June in Turkey, while the first commercial delivery of gas from the Shah Deniz phase 2 upstream project - the field that will fill this new infrastructure - into Turkey occurred June 30.
(The banner photo, above, shows fields near Alexandroupoulis in northern Greece where TAP has already been laid underground. Credit: EBRD)