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    TAP Start Signals Completion of Southern Gas Corridor

Summary

The mega-project adds another exporter to Europe: Azerbaijan. But it comes at a time of plenty.

by: William Powell

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TAP Start Signals Completion of Southern Gas Corridor

UK major BP, the project leader of the consortium developing Azerbaijan's Shah Deniz gas field in the Caspian Sea, announced the start of commercial gas deliveries to Europe December 31. 

The 10bn m³/yr TransAdriatic Pipeline (TAP) linking Albania to southern Italy had been ready to flow gas since mid-November, depending on shipper nominations. But wholesale gas prices have since risen, along with global gas demand.

BP said that the start of Caspian gas deliveries through the final section of the Southern Gas Corridor (SGC) marked "the full integration of the entire SGC gas value chain, stretching 3,500 km from Azerbaijan to Europe. Deliveries through this final stage of the system follow safe and reliable gas deliveries to regional markets from the Shah Deniz field via the first two sections of SGC – the South Caucasus Pipeline expansion (SCPx) and Trans-Anatolian Pipeline (Tanap) – that started mid-2018."

Shah Deniz is expected to supply 16bn m³/yr to markets in the region and Europe. The president of Azerbaijan's state producer Socar, Rovnag Abdullayev, expressed "deep gratitude to the partner companies, specialists and all our colleagues, who participated in TAP, Shah Deniz 2 and the SGC projects, contributing to the first delivery of Azerbaijani gas to the European market."

He also thanked the financial institutions that supported the project and the residents of the communities where the pipelines pass. “Seven years ago, we made the final investment decision together with our partners. We embarked on this journey by signing 25-year gas sales agreements with European gas distribution companies.... Coming from a new source through an alternative route, it will contribute to European energy security."

He said that as local production in the region fell, Europe will need more gas and Azerbaijan will help fill the gap for decades to come.

BP's regional president Gary Jones said that "notwithstanding the complexity of all aspects of the project – engineering, technical, geographical and geopolitical – it has been delivered safely, on schedule and under budget. This is an historic milestone, with Azerbaijan and Europe now connected with a direct, safe and reliable energy link, that again demonstrates that together we can deliver the most complex mega-scale projects successfully.”

The capacity of the SGC may increase, depending on demand for gas. The project had been expected, before the glut of LNG export projects coming on line and the adoption of the European energy transition, to carry about 30bn m³/yr from central Asia to Turkey and Europe.

There are other fields in the Caspian Sea and littoral states that could provide the gas if needed and this would improve the economics of the $40bn project. But the usual lenders for such projects, such as the European Investment Bank, are finding it difficult to support fossil fuels and Europe is investing heavily in cheap, quick-to-build and more flexible LNG import capacity. And Gazprom is building more pipelines to the Balkans. The start of this year thus saw two other new supply routes open up.