TAP: The Best Candidate, Not Just on Paper
By Kjetil Tungland, Managing Director of Trans Adriatic Pipeline
Job interviews are an exciting, albeit challenging, process. The intense preparations, the anxiousness about the result, and finally the thrill of being selected are a truly unique experience.
A similar ‘interview process’ is drawing to a close in the energy world. In approximately 1.5 month, the Shah Deniz Consortium (SDC) is set to decide which of the two pipeline projects remaining in the competition will open Europe’s Southern Gas Corridor. Of course, parameters and timeline are much more complex as compared to a normal job application, yet, the core concept stays the same. ‘CVs’ have been submitted, references have been provided and several rounds of discussions have been held. Therefore, let’s add up the numbers, and see why the proposal of the Trans Adriatic Pipeline (TAP) is the most strategic.
First, TAP’s Decision Support Package (DSP) is the only transportation bid based on a completed Front End Engineering Design (FEED). This means that key technical parameters, such as optimal onshore and offshore pipeline routing, are defined, and logistical efforts required during construction – for example resources, machinery, time and infrastructure – are outlined. This demonstrates TAP is ready for the next stage including detailed engineering, start of tendering for steel pipes and construction services.
But TAP’s advanced status is not recent news. The Trans Adriatic Pipeline has been leading by example ever since February 2012, when the project was the first pipeline to be pre-selected and enter exclusive negotiations with the Shah Deniz Consortium. TAP’s progress carried on. The Trans Adriatic Pipeline was first to sign a Funding and Equity Agreement with SDC partners BP, SOCAR and Total in August 2012, first to finalise a Shareholder Agreement with the three Consortium members in November 2012 and, in the same month, first to conclude a Memorandum of Understanding (MoU) with the Trans-Anatolian Pipeline (TANAP).
Second, TAP’s route through Greece, Albania, and Italy is the most viable option for Europe. It is the shortest, most economical and most direct way for Caspian gas to reach the European markets that need it the most. Thus, by connecting to key infrastructure such as the Ionian Adriatic Pipeline (IAP) and the Western Balkans Ring, TAP can bring new gas supplies to countries such as Albania, Bosnia and Herzegovina, Montenegro and Croatia – markets that currently depend on a single gas source or do not have access to gas at all.
Equally important is the fact that TAP can provide new supplies to Bulgaria, either via the planned Greece–Bulgaria Interconnector (IGB) or via reverse flow at the interconnection point Kula-Sidirokastro. The latter option has already been used in 2009 to inject natural gas in the Bulgaria-Greece pipeline from the Greek LNG terminal at Revythoussa.
Third, TAP will provide economic stimulus to two important Eurozone countries as well as Albania. In Greece, the implementation of TAP will inject direct foreign investment worth €1.5 billion as well as create approximately 2,000 direct and 10,000 indirect jobs. In addition to helping Greece realise its ambition to become an energy hub for South Eastern Europe, TAP will also provide a positive signal for foreign investors.
For Italy and Albania comprehensive studies by independent organisations have been undertaken to calculate contributions to GDP and direct and indirect employment opportunities created each year during construction and operations phases.
In Italy, a study undertaken by Nomisma Energia concluded that overall, the construction of TAP will contribute directly to GDP in the Puglia region of approximately € 80 million per year, during the four years of construction (2015 - 2018). In terms of employment, the Nomisma Energia study found the direct effect for the same period will amount to approximately 150 jobs (part-time and full-time) per year.
In Albania, TAP will bring in total an €1 billion investment – the largest foreign investment to date – and foster economic activity by generating employment, sustaining infrastructure creation and developing local skills and capabilities. A study undertaken by the Oxford Economics concluded that the direct impact of the project is projected to peak in 2017, at which point activity is expected to generate €57 million for Albanian GDP and create 4,200 jobs (part-time and full-time) per year. Furthermore, TAP will support the development of Albania’s natural gas market through collaboration on the National Gas Master Plan, continuing the country’s commercial and physical integration with Europe.
Fourth, in recent months, political stakeholders reinforced their support for TAP on several occasions. On February 2013 the Intergovernmental Agreement between Albania, Greece, and Italy on TAP was signed, and it was ratified by the first two countries in March and April respectively. About one month ago Albania signed and ratified a Host Government Agreement with TAP. Most recently, the three host countries’ governments held a trilateral meeting in Rome, demonstrating once again, their strong endorsement of TAP.
Last but not least, TAP requires no government subsidies, no EU grants and no contributions from the European taxpayer, a key attribute in times when public budgets are under pressure. TAP’s shareholders are world leading energy companies with a great track record when it comes to laying pipelines, having built more than 20,000 kilometres of pipeline worldwide.
All in all, TAP is a pioneering project, technically and economically robust, agile, adaptable, ready to transport Shah Deniz gas and diversify energy supplies in Europe.
So, if it sounds like TAP’s advantages and benefits are undeniable, it is because we have done our homework, constantly pushed the envelope and took a holistic approach to the Southern Gas Corridor value chain from the beginning. The Trans Adriatic Pipeline truly is the best candidate, not just on paper.