TAP Launches Market Test, Eyes Expansion (Update)
(Updates on progress of TAP, clarifies capacity rules)
The Trans Adriatic Pipeline (TAP) operating company has launched a market test to allow shippers to make non-binding bids for new, long-term capacity in the line. These bids could then progress into binding contracts that would allow the financing of new capacity.
CEO Luca Schieppati said that starting 2020, TAP plans to initially transport 10bn m3/yr. “But TAP is able to double its capacity to 20bn m3/yr; therefore, with the project now being more than 88% complete, we aim to ensure that the pipeline can expand in line with the future demand to transport gas into Europe.”
TAP is the European section of Southern Gas Corridor (SGC). Its first phase was exempted from the EU Third Energy Package that requires new capacity to be contestable by other parties and the whole 10bn m3/yr gas comes from Azerbaijan’s Shah Deniz stage 2.
Socar told NGW that the European Union's Third Energy Package was approved three months before approving TAP in March 2013, but all tenders were published in 2012 and EU exempted TAP from restrictions. “There are some legal uncertainties around TAP expansion, but the most important thing is that Azerbaijan may be able to meet half of the expansion demand in mid-2025, and it will be able to cover all of 10bn m3/yr in early 2030s. Azerbaijan is only a shareholder in TAP and the project is under EU legislation entirely,” an official said.
Two officials involved in SGC had earlier told NGW that for expansion of TAP, at least one other supplier was needed with at least 5bn m3/yr to comply with regulations but both Socar and Vugar Veysalov, TAP's head of external affairs, said this information is “inaccurate.” A Socar official also said that a temporary supplier partner was needed for five to six years.
Azerbaijan is developing the French Total-led Absheron field and some others, but the final capacity is not likely to surpass 5bn m³/yr by mid-2025, when the TAP expansion is scheduled. But in early 2030s, Azerbaijan is preparing to lauch Shah Deniz stage 3, the biggest layer of the offshore field, which is estimated to contain as much as SD1 and SD2 together and has further production capacity.
Russian gas seems be the most feasible case, as the country is completing TurkStream line 2. With capacity of 15.75bn m3/yr it is aimed at Bulgaria and Serbia; but some gas might be supplied to Italy through TAP. The expansion of pipeline is expected to start in mid-2020s.
The market test will be conducted in two main phases: the non-binding phase, which began July 1, followed by a binding phase, expected to start no earlier than the second quarter of 2020, TAP says. TAP is owned by UK BP (20%), Azeri Socar (20%), Italian Snam (20%), Belgian Fluxys (19%), Spain's Enagas (16%) and Swiss Axpo (5%).
Veysalov told NGW that the total TAP phase 1 cost is €4.5bn, and as of end-June, between Greece, Albania and Italy, around 98% of the pipes are already in the ground and trenches back-filled. Reinstatement along the route is 94% complete. “It is overall 88% complete,” he said.
In the most challenging section, Italy, he said that the project continues to progress on schedule: “The 1.5-km micro-tunnel in Melendugno was complete at the end of April without any impact or interference with the tourist activities and the environment along the coast. Works for the completion of the Italian section of the pipeline and the pipeline receiving terminal (PRT) are ongoing, with about 30% of the PRT completed and 3.5 km of pipe out of 8.2 km already in the ground. In line with the single authorisation permit granted by the economy ministry in May 2015, TAP has now secured all but two of the verifications of compliance (VoC). The documents related to those last two VoC have been submitted for the final assessment of the environment ministry.”