TANAP: From a Piece of Paper into a Piece of Steel
In a session dedicated to the Southern Corridor gas project at the Romania Oil & Gas Conference in Bucharest, Romania, Mr. Magsud Mammadov, External Relations Director, TANAP, provided more details on the pipeline project's progress.
He noted the three elements of the entire project to deliver Shah Deniz gas to Western Europe: the South Caucasus, Trans Anatolian (TANAP) and Trans Adriatic (TAP) pipelines whose total length will comprise over 3,500 kilometers, an investment comprising $45 billion and involving 13 international companies. The final capacity of the pipeline, he said, will be 100 BCM.
Construction of TANAP, he said, will start in April 2015 and be completed in around 4 years. “We plan to be operation in Turkey by 2018,” he reported, “and join TAP by 2019.”
The cost of TANAP, according to Mr. Mammadov, is $12 billion, with BP, Botas and SOCAR as shareholders. Following the signing of international governmental agreements in 2012, the project's environmental social impact assessment has received a go-ahead from Turkey's Ministry of Environment in July 2014.
The Turkish parliament, he reported, had ratified an amendment and has selected pipe suppliers – six of them Turkish companies. “Already, early works are in progress in six different locations for the 56 inch section of the pipeline,” he said, adding that now was the time for selecting the construction contractor, and start offshore pipeline construction next April.
“The direct benefit for Turkey is that it's going to have a $12 billion direct investment to the Turkish economy; it's more than 15,000 employment opportunities for Turkey and investment into infrastructure for the Turkish economy, and will definitely contribute towards Turkey's goal of becoming an energy hub, which is one of its goals for 2023,” he explained.
TANAP, he said will be Turkey's fourth energy link to Europe, delivering sources other than from Russia or the Middle East, providing energy to 7 million European homes. Furthermore, opined Mr. Mammadov, it will contribute to Turkey's economic-political stability and increase collaboration, integration and partnership in the region.
Finally, he reviewed possible contributing sources of gas, like from Northern Iraq or the Eastern Mediterranean, which will benefit Western Europe, but also the Balkans and Eastern Europe, including Romania.
“All the stakeholders, shareholders, countries and leaders are all committed to turning this project in to reality. Indeed, TANAP is turning from a piece of paper into a piece of steel,” he concluded.
Mr. Reha Akyul Muratoglu, Head of Transit Petroleum Pipelines Deptartment, Ministry of Energy and Natural Resources, Republic of Turkey, also weighed in, first recalling the struggle for the parties involved in the Nabucco project, which lost out in the selection of the Trans Adriatic Pipeline (“TAP”), a commercial decision by the Shah Deniz Consortium, he said.
He explained that the name of his presentation was “Is the Souther Corridor project finally becoming a reality?” According to him, the answer is yes, after a decade.
Mr. Muratoglu commented, “Of course, this is not an easy supply chain. We are talking about the transportation of gas from the Caspian Sea into Turkey and onwards to TAP. According to Shah Deniz partners' estimates this total business chain is comprised of a total investment of $45 billion, a huge volume. We're talking about several projects which need to be aligned at the end of the day, otherwise by the years 2018-19 we will not be able to talk about real gas transportation.”
Upstream development, he said, should be aligned with South Caucasus pipeline expansion, then with the TANAP project, which should later be in alignment with TAP. “This is not an easy task for sure, but so far the progress is quite satisfactory,” he said.
As regards the legacy of oil & gas cooperation between Azerbaijan and Turkey, he noted that the Baku–Tbilisi–Ceyhan oil pipeline had been a “win win” by providing Azerbaijan access to markets, while balancing supply security; meanwhile, Turkey was the first customers for Azerbaijani gas from Shah Deniz Phase I production.
“Within the context of Phase II production, Turkey has also committed itself to buying an additional 6 BCM of gas,” he explained.
That “win win,” said Mr. Muratoglu will continue between the two countries regarding the latter project.
Regarding TANAP, he said that it was progressing and Turkey's BOTAS had acquired a 30% stake in the project. Turkish companies, he reported, would be involved in the supply of pipes for it.
Of the Turkey-Bulgaria interconnector, Mr. Muratoglu said it will provide bi directional gas flows between the two countries. He stated, “It will absolutely enhance the supply security for both Bulgaria and Turkey, and will further promote market integration in the Balkan region.
“I believe this project is also important in terms of natural gas producing companies who are active in Romania Black Sea offshore, so once this pipeline is built I believe it will have access to the Turkish market.”
Turkish natural gas consumption, he said, is more than 46 BCM/year – one of the biggest natural gas markets in Europe. Meanwhile, feasibility and an environmental impact assessment are being carried out in order to help the parties involved decide whether or not to proceed with the project.
Mr. Muratoglu reported that the Trans Caspian pipeline is also back on the agenda and, once TANAP is in place, Turkmenistan will also be encouraged to transport its gas through the Southern Corridor.
Mihnea Constantinescu, Ambassador-at-large, Special Representative for Energy Security, Government of Romanian, spoke of the triangle of “good governance, energy security and security” in connection to development of the Southern Corridor.
Romania, he said, was both concentrating upon delivering its own energy projects as well as those collaborative projects under the Energy Community Treaty. Mr. Constantinescu said, “Whatever project we are developing in the oil & gas sector – be it strategic regional project or a national project, or interconnection with a neighboring country – this reflects the need for a strengthening of future energy security of each of our countries.”
Until 2030, he explained, for Romania this means continuing to develop its oil & gas sector, which calls for a strong partnership between governments and oil & gas producers in countries like Romania who can potentially contribute to the Southern Corridor. Aspects like the market, he said, will be reflected in Romania's energy strategy (and are in European legislation).
“It's a strong encouragement that the results of the stress tests developed by the European Commission in relation with the member countries of the European Union and of the Energy Community Treaty emphasized that, and many of these conclusions show, that we need this partnership between governance and business."
Specifically of the Southern Corridor, he said, “Countries that are in the region, or are neighbors to the Southern Corridor chain of transmission of gas from the Caspian to the European Union, should consider themselves not only beneficiaries of the Southern Corridor, but also to consider what their contribution could be.”
This, he said, means tangible contributions or ways of increasing the attractiveness of EU and other European countries to benefit the development of the Southern Corridor. Mr. Constantinescu called it a “pillar for competitiveness.”
He explained, “It also attracts the development of industry, in the sense of re industrialization, not just for household consumers. It also would represent a pillar for social stability.”
From Romania, he said that future operations in the Black Sea will contribute towards strengthening the role of the Southern Corridor. “We are pleased to hear about the progress of OMV-Petrom and ExxonMobile in the blocks in the Black Sea. We foresee that next year Romania will open a new round of concessions, either onshore or offshore, that could also strengthen the possible contribution that Romania could bring to the balance of energy resources of the European Union, but also towards the balance of our energy neighbors like Moldova.”
Regarding Black Sea offshore development, he said it was crucial that new sources reach the national transportation network in due time, explaining, “The national system operator, Transgas, is doing its best to make sure the connection between the offshore network and the national transmission system.
“This will create the possibility for operators to export their gas reserves in the region through the future interconnection reverse-flow with Bulgaria, and I hope we'll be able to announce, after a long wait, the entering into operation of the interconnector with Bulgaria by next year.”
A reverse-flow interconnector with Hungary is also forthcoming, according to him. He added that strong EU support was needed regarding interconnection between Romania and Moldova, to help the country strengthen its infrastructure for gas as well as electricity interconnection.
South Stream, he said, does not have much relevance in Romania.
He offered, “In the context of future developments of gas shipments coming from the Caspian region through Turkey, and the development of the gas reserves in the Black Sea, we considering that without fully complying with EU legislation, South Stream could become an unsustainable project that could be directed against the interests of the European Union.
“If you look at a map," continued Mr. Constantinescu, "it is directed against the energy security of Ukraine, so it could become a source of instability for the region, again without complying with EU legislation it creates a precedent that would put into question even the sense, the essence of the energy governance framework of the European Union.”
More needs to be known, he said, about the initial capacities of the Southern Caucasus, Trans Anatolian and Trans Adriatic pipelines in South-eastern Europe. Also, he asked what other sources besides from Azerbaijan's Shah Deniz II gas development were possible suppliers of natural gas capacity, like Iran or the Eastern Mediterranean.
He added, “There is a need for all of the countries in that region, and their partners in the EU and the neighborhood, to maintain a proper and secure environment for exploration and exploitation of the resources."
-Drew Leifheit