The completion of the Trans-Adriatic gas pipeline construction in October 2020 drew a final line under the implementation of the Southern Gas Corridor project which is of strategic and economic importance for the whole of Europe. Azerbaijan, Georgia and Turkey have connected the gas-rich Caspian Sea to the European market with reliable pipeline infrastructure.
Azerbaijan is becoming one of the traditional European suppliers – Russia, Norway, Algeria, Qatar, and the United States. The SGC fully complies with all the conditions of the EU’s third energy package and is a new diversified source that meets the environmental aspirations for decarbonisation, shift towards clean fuels and zero emissions by 2050. TAP is filled with natural gas from the Greek-Turkish border to the receiving terminal in southern Italy. Despite the readiness of the pipeline and the entire system for launch, TAP asked and received from the Italian regulator another exception from the rules, according to which it can postpone the first supplies until December 2021. The Italian regulator ARERA reported that the main reason for granting a delay was the pandemic of a new coronavirus, whose consequences are impossible to predict. In response, the TAP spokesperson said that the quarantine does not affect the project’s launch date in October 2020, S&P Global Platts noted. If this happens, this will be the third deferral that the project gets.
France, Great Britain, Spain and Portugal, as well as the countries of south-eastern Europe can now access the Caspian gas via the European networks, despite the fact that the TAP route ends in Italy. TAP’s landfall in Italy opens up many opportunities for further transportation of Caspian gas to wider European markets.
The connection point between TAP and the Snam Rete Gas natural gas transportation system in Apulia, Italy, is expected to be completed and ready for gas transportation by mid-November 2020.
TAP will transport natural gas from the giant Shah Deniz II field, located in the Azeri sector of the Caspian Sea, to Europe. The 878 km long pipeline links to the Trans-Anatolian pipeline (TANAP) at the Turkish-Greek border in Kipoi, crosses Greece, Albania and the Adriatic Sea, and then comes ashore in southern Italy.
Key milestones of SGC
• 25 October 2011, Izmir - Azerbaijan and Turkey signed a Memorandum of Understanding on creating a consortium for the construction of a gas pipeline to supply gas from Shah Deniz field to Europe via the Turkish territory. The document was signed by the Ministry of Energy and Natural Resources of Turkey and the Ministry of Industry and Energy of Azerbaijan. The consortium will consist of the State Oil Company of Azerbaijan (SOCAR), Turkish BOTAS and TPAO.
• 26 June 2012, Istanbul - An agreement was signed between the Government of the Republic of Azerbaijan and the Government of the Republic of Turkey on the sale of natural gas to Turkey, transit of Azerbaijani gas through Turkey, and construction of an independent Trans Anatolian pipeline to transport natural gas through Turkey.
The carrying capacity of the new gas pipeline at the first stage will be 16 bcm: 10 billion - for Europe and 6 billion cubic meters - to Turkey. In the future, it is possible to increase the capacity to 37 billion cubic meters. The width of the corridor will be 22 meters, and the total length of the TANAP pipeline, according to initial estimates, is 1,700km.
Participation interest in the project is as follows: SOCAR – 80%, the rest 20% belong to BOTAS and TPAO. The project was scheduled to be launched in 2016-2017.
• 27 November 2012 - President of Azerbaijan Ilham Aliyev signed a Law on ratification of the Agreement signed between the Government of the Republic of Azerbaijan and the Government of the Republic of Turkey for the sale of natural gas to Turkey, transit of Azerbaijani gas through Turkey and construction of an independent pipeline to transport natural gas through Turkey.
• 17 January 2013 - Turkey’s President Abdullah Gul approved an intergovernmental agreement on the implementation of the Trans-Anatolian gas pipeline project.
A. Gul approved the Azerbaijan-Turkey agreement on the Trans-Anatolian gas pipeline system and its amendments, including the agreement between the government of Turkey and the Trans Anatolian Gas Pipeline Company B. V.
• 18 January 2013 - President of Azerbaijan Ilham Aliyev signed a Law approving the “Agreement between the Government of the Republic of Azerbaijan and the Government of the Republic of Turkey on the Trans Anatolian gas pipeline system”.
• 13 February 2013 - a trilateral Greek-Albanian-Italian intergovernmental agreement on the construction of the Trans-Adriatic gas pipeline (TAP) was signed in Athens. The pipeline’s capacity will make from 10 to 20 billion cubic meters per year.
The project shareholders are the Swiss company EGL (42.5%), Norwegian Statoil (42.5%) and German E.ON Ruhrgas (15%).
It is planned that the gas pipeline will run from the Greek city of Komotini to Albania, and then along the bottom of the Adriatic Sea toward the Italian port of Brindisi.
• 19 March 2013 - The Cabinet of Ministers of Turkey approved an intergovernmental agreement with Azerbaijan on the sale, purchase, transit tariffs and transit of natural gas through Turkey, as well as an intergovernmental agreement on the Trans-Anatolian gas pipeline system (TANAP).
• 27 March 2013 - The Albanian Parliament ratified the agreement on the construction of the Trans-Adriatic pipeline (TAP), which was signed in Athens on February 13 this year. The construction of the pipeline through the Republic will bring investments worth about $2 billion to the country.
• 8 April 2013 – At the meeting of the World Economic Forum hosted in Baku, President of Azerbaijan Ilham Aliyev said that the Trans Anatolian gas pipeline (TANAP) would play a major role in ensuring Europe’s energy security for at least 100 years.
• 27 July 2013 - As part of the Trans-Anatolian gas pipeline (TANAP) project, a prequalification tender was announced for the production and supply of pipes with external and internal coatings.
• 19 September 2013 - Agreements were signed with European gas buyers as part of the second stage of development of Shah Deniz gas condensate field in the Azerbaijani sector of the Caspian Sea.
The volume of revenues from contracts signed in Baku for the supply of around 300 bcm of Azerbaijani gas from Shah Deniz field to Europe will amount to about $200 billion.
In particular, Germany’s E. ON will purchase 40 billion cubic meters of Azerbaijani gas under a 25-year contract. Gas supplies will start no earlier than 2019.
According to the French GDF SUEZ, the company entered into the contract for 2.6 billion cubic meters of Azerbaijani gas per year.
Spanish Gas Natural Fenosa will receive 1 billion cubic meters of Azerbaijani gas annually, according to the company.
The Italian company Hera will receive 300 million cubic meters of Azerbaijani gas annually as part of the signed supply agreement.
• 4 November 2013 - The consortium of the Trans-Anatolian gas pipeline construction project (TANAP) started selecting land for the construction of this pipeline.
• 2 December - The Parliament of Greece ratified the agreement signed in June 2013 between the TAP (Trans-Adriatic pipeline) and the government of Greece as the host country. The agreement sets the standards within which the project will be implemented. This includes land acquisition, technical, environmental and safety standards.
• 5 December 2013 - The Italian Parliament ratified the trilateral intergovernmental agreement (IGA) signed between Italy, Greece and Albania on February 13, 2013 as part of the Trans-Adriatic gas pipeline (TAP).
• 16 May 2013 - TAP was granted exemptions from the requirements of the EU energy regulator. As is known, the third energy package of the European Union came into force in 2009, which prohibited gas market participants to perform gas transportation. However, an exception was made for the Trans-Adriatic pipeline at the request of shareholders. On September 7, 2011, Trans Adriatic Pipeline AG (TAP AG) submitted its «Third Party Access Exemption» applications in all three host countries. The exemption will let TAP AG enter into long-term «transport or pay» gas transport agreements with shippers of Shah Deniz II gas.
• 7 January 2014 - The Trans-Adriatic pipeline (TAP) and ICGB, the company involved in the development, financing and construction of the Greece-Bulgaria gas interconnector (ICGB), signed a Memorandum of Understanding and Cooperation.
The Memorandum will allow companies to cooperate in determining the connection point of pipelines in the immediate vicinity of Komotini (Greece)
Creation of the necessary infrastructure will allow the start of gas supplies through the Bulgarian gas network to the regions of South-East Europe.
The TAP project is designed to transport gas from the Caspian region through Greece, Albania and across the Adriatic Sea to southern Italy and further to Western Europe.
• 10 February 2014 - Foreign Affairs Minister of Azerbaijan Elmar Mammadyarov stated at the press conference, held in Bagdad, that Azerbaijan had offered Iraq an access to the Southern Gas Corridor linking the Caspian Sea with the EU so that to help Iraq in gas deliveries to Europe.
«Any other countries that have already expressed interest, including Iraq, can also join the Southern Gas Corridor project if they want, and we are ready to start negotiations», Mammadyarov said.
• 10 April 2014 - The consortium for the development of the Trans-Adriatic pipeline (TAP) project received permission to build the Albanian section of the pipeline.
The permit was issued by the national territorial Council of Albania, headed by Prime Minister Edi Rama.
Construction work in Albania will begin in 2015 with the modernization and construction of access roads and bridges. Next, the pipeline will be laid and other facilities related to the gas transportation infrastructure will be built.
• April 2014 - For the period of 2014-2020, the European Commission approved the program on construction of gas pipelines, including those between Spain and France which expect to receive gas from the Southern Gas Corridor. The EU financing for energy infrastructure under the Connecting Europe Facility is €5.85 billion that will be spent on funding for 248 cross-border projects by 2020. These projects will benefit from accelerated planning and approval procedures for a maximum of three years, as well as from effective environmental risk assessment procedures. It will let Europe increase gas supplies from Azerbaijan and start export from Turkmenistan and Iran (if sanctions are lifted).
• 24 July 2014 - SOCAR created two companies within the Southern Gas Corridor project. Both companies (SOCAR Upstream Management International and SOCAR Midstream Operations) are located in the central office of SOCAR and have 1 thousand manats of authorized capital each.
• 28 August 2014 - A $1 billion loan agreement was signed as part of the financing of the acquisition by TPAO of a 10% stake of the French company TOTAL in Shah Deniz project.
• 10 September 2014 – President of the Republic of Azerbaijan Ilham Aliyev signed a Decree “on measures to be taken to more effectively organize the process of obtaining rights to land plots and other real estate objects in connection with the South Caucasus pipeline expansion project”.
• 20 September 2014 – The Southern Gas Corridor foundation laying ceremony took place. President of Azerbaijan Ilham Aliyev, Prime Minister of Georgia Irakli Garibashvili, Prime Minister of Greece Antonis Samaras, President of Bulgaria Rosen Plevneliev and other participants of the ceremony signed on the first pipe to be laid into the foundation of the Southern Gas Corridor.
• 3 February 2015 - German Chancellor Angela Merkel declared about big hopes that Germany rests on the implementation of the Trans-Anatolian gas pipeline
• 3 March 2016 - European Commission approved construction of Trans-Adriatic gas pipeline.
• Construction of the gas pipeline started in May of the same year.
• In 2016, the Asian Development Bank and the Azerbaijani Government signed an agreement on allocation of a $600 million loan for the second stage of development of Shah Deniz gas field.
• On January 16, 2017, the World Bank, following on from the loan and guarantee agreement, allocated $400 million to Azerbaijan for a 30-year term. The World Bank allocated a similar loan to Turkey; the loans are intended for the construction of the Trans-Anatolian gas pipeline. In October of the same year, the European Bank for Reconstruction and Development provided a $500 million loan for the construction of the TANAP gas pipeline.
• In February 2018, the EBRD once again announced allocation of a loan in the amount of 60 million Euro under the Southern Gas Corridor project. The loan was meant for the construction of the BRUA gas pipeline (Romania, Bulgaria, Hungary and Austria).
• In March 2018, the governments of Azerbaijan and Germany agreed on a $1.5 billion loan guarantee to finance the Southern Gas Corridor. The European Investment Bank also announced allocation of a loan worth 932 million Euro for the construction of the TANAP gas pipeline.
• Following the commissioning of the Trans Anatolian gas pipeline in Turkey on June 12, in October 2018 Italy allowed the construction of the TAP gas pipeline for Azerbaijani gas supplies.
• On May 20, 2020, as part of the test launch of the Trans-Adriatic pipeline, the first consignment of gas from Azerbaijan reached the territory of Albania.
