Ukraine Conflict Keeps Gas 'Steppingstone' in Spotlight
Months before winter, markets in Europe are already shivering as the war in Ukraine threatens to curtail natural gas deliveries from Russia.
But as U.S. lawmakers push for greenlighting domestic natural gas exports to dilute Russia's energy dominance, backers of another supply alternative are speaking up.
Michael Hoffmann, external affairs director for the Trans Adriatic Pipeline (TAP), a multibillion-dollar project to ferry Caspian Sea natural gas to Italy, visited Washington, D.C., this week to drum up support for the 540-mile gas pipeline with U.S. diplomatic and energy officials.
In an interview yesterday, Hoffmann was careful not to characterize the pipeline as a challenge to Russia, which provides about a third of the nearly 19 trillion cubic feet of gas consumed in Europe each year.
By contrast, he noted that TAP would pipe in an initial 350 billion cubic feet of gas per year when it comes online five years from now.
"One has to put [TAP] into perspective, but it's vitally important," Hoffmann said. "It's significant because it's a new route, and we very much see this as a steppingstone for more gas coming through" the 2,200-mile "Southern Gas Corridor" to Europe.
TAP's route would see Caspian gas go to Italy via Greece, Albania and the Adriatic Sea, linking to the separate TANAP pipeline in Turkey. TANAP ultimately connects to one of the world's biggest natural gas and condensate resources, the Shah Deniz field offshore Azerbaijan. BP PLC, one of the site's developers, estimates the field has 40 trillion cubic feet of gas in place.
The U.S. government sees potential for the region, with the State Department dubbing TAP "an important contribution to global energy security."
Just how big a contribution is up for debate, with TAP's backers preferring to promote its global impact while downplaying its effect on Russia's state-owned gas giant OAO Gazprom.
But even if it came online tomorrow, the pipeline would offer little solace to Ukraine, which has seen its Russian gas supplies dwindle in the face of an ongoing military conflict in the east.
"For the future of Ukraine's energy situation, TAP and TANAP are just going to have a small influence -- it's just not going to tip the balance strategically," said Michael Cain, a senior researcher at Engility and an expert on Eurasian energy policy.
However, Cain added that the Southern Gas Corridor could -- when coupled with liquefied natural gas exports from places such as the U.S. -- have a more substantial effect on the cost of the commodity in Europe.
There's a possibility that "more LNG and a little bit more piped gas is going to undermine Gazprom's pricing structure," Cain said, which "will die of a thousand cuts."
TAP's shareholders include several other partners in the Shah Deniz consortium, including BP, Norway's Statoil ASA and the state-owned Azerbaijani oil company SOCAR.
Hoffmann noted that the pipeline's route is often referred to as the "fourth corridor," adding to Europe's existing options in the North Sea, Russia and North Africa. He defended TAP's geopolitical significance, contending that it "absolutely" accomplishes its goals of "security of supply and diversification of supply sources."
TAP will have several offtake points along its route capable of providing Bulgaria and Greece with 35 billion cubic feet of gas annually. The bulk of the gas will go to Italy.
"When one looks at the dependency in southeastern Europe on single-supply pipeline sources, Bulgaria and Greece are two of the most dependent countries," Hoffmann said.
Blake Sobczak, E&E reporter
Republished from EnergyWire with permission. EnergyWire covers the politics and business of unconventional energy. Click here for a free trial
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