TAP Defeated Nabuco-West

TAP Defeated Nabuco-West

The Shah-Deniz Consortium will announce the decision on the development of a pipeline to transport Shah-Deniz 2 natural gas to Europe on June 28, 2012. The BP-led group developing Azerbaijan’s vast gas reserves has chosen the Trans Adriatic Pipeline (Tap) via Greece to link to Europe, defeating the Nabucco West consortium, which had backed a route to Austria.

The project reflects a European Union push for alternatives to Russian gas imports, and is expected to start flowing in 2019. Tap is fronted by Norway’s Statoil, Switzerland’s Axpo and E.ON Ruhrgas of Germany.

The group developing Azerbaijan’s vast gas reserves has chosen the Trans Adriatic Pipeline (TAP) via Greece to link to Europe, officials said on Wednesday, defeating the Nabucco West consortium which had backed a route to Austria. The project, first envisioned more than a decade ago, reflects a European Union push for alternatives to Russian gas imports and is expected to start flowing in 2019.

According to the TAP Consortium, the pipeline has all the qualities to become the pipeline opening the Southern Gas Corridor. Its offers the shortest and most direct route to the largest European markets and the most competitive gas tariff offer. In order to make the most of the Southern Gas Corridor, it is essential that this new energy route reach as many different European markets and as many consumers as possible.

Italy, the destination market for the Trans Adriatic Pipeline, offers high liquidity, historically attractive gas prices and great potential for transportation of natural gas farther into Western Europe. At its arrival point in Southern Italy, TAP will connect with the national grid operated by Snam Rete Gas and be able to reach the Italian virtual trading point from which all gas exits can be accessed.

TAP would also allow Caspian gas to reach the growing markets in the Balkans and South Eastern Europe. In Albania, TAP committed to support the country by promoting development of the domestic gas market, linking it to regional networks.
Several agreements have also been reached with transmission-system operators and other governments in South Eastern Europe, giving TAP the ability to connect with planned pipelines such as the Ionian Adriatic Pipeline and the West Balkan Ring. As a result, Albania, Slovenia, Croatia, Bosnia and Herzegovina and Montenegro can all benefit from Shah Deniz gas.

Importantly, TAP can provide Bulgaria with a new source of gas by connecting to existing or planned infrastructure.

TAP’s business model is based on offering the most cost-effective solution in the Southern Gas Corridor and has been developed to meet the criteria set out by the Shah Deniz consortium. Based solely on private capital, it has an efficient design that – provided competing projects are not subsidised by public funds – will offer an extremely competitive transportation tariff.

The history of the development of European gas infrastructure underlines the importance of building projects in line with the development of gas demand and marketable gas reserves. Based on broad industry consensus, the only gas available today is that on sale from Shah Deniz II in Azerbaijan. TAP initially plans to transport the 10 bcm of gas from the second stage of the Shah Deniz gas field that is scheduled to come on stream in 2018.

TAP’s direct route and use of a large diameter pipe mean that it has the capacity to easily expand to accommodate additional volumes as and when they come on stream. To expand the pipeline will not require further construction.

© CESD, 2013

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