A known unknown has been answered with respect to gas transit infrastructure in Europe. The Shah Deniz consortium, involving BP and Azerbaijan’s public company SOCAR amongst others, has decided in favour of the Trans-Adriatic Pipeline (TAP), connecting Turkey and Italy via Greece and Albania (and against the European Commission-backed Nabucco West project) as the preferred route to ship Caspian gas into the EU. The decision comes after SOCAR submitted a bid for DESFA, the company operating Greece’s gas grid which is tendered by the government. (In related news, Gazprom gave up its bid for DEPA, the Greek gas trading company, reportedly under pressure from the European Commission.)
The choice for TAP is disappointing for the advocates of Nabucco – Austria, the Central European governments, Romania, and Bulgaria - which argued that it would bring about diversification away from Russian gas. It is not the first time plans for Nabucco have stuttered. Originally the pipeline was projected to run from Central Anatolia to the Baumgarten storage facility in Austria. The launch of the Transanatolian Pipeline (TANAP) by Turkey and Azerbaijan led the consortium to scale down plans and opt for Nabucco West, covering only a portion of the original route and with capacity of 10 billion cubic metres (as opposed to 30 bcm in the original version).
Meanwhile Italy and Greece have applauded the selection of TAP. Athens in particular thinks it will generate employment (2700 jobs in 2015-18 as the pipes are laid down) and €320m in revenue. It is a personal win for Andonis Samaras, Greece’s conservative prime minister, who lobbied Baku hard – at a time he is under pressure thanks to the Democratic Left’s withdrawal from the coalition government.
Meanwhile SOCAR has denied claims that turning down Nabucco West is politically motivated. TAP already has 15 confirmed buyers downstream, is shorter, and therefore cheaper. The Azeris are saying that while the gas from the Shah Deniz II will go to Italy, future reserves could be used to fill Nabucco West making it commercially viable. Regardless of whether that’s feasible or not, the TAP consortium would have to demonstrate it makes a real contribution to diversification. It has drummed up its potential to carry Caspian gas, via a future extension to the Western Balkans, which is highly dependent on Russian supplies and suffered from the cuts of winter of 2009 (Croatia lobbied for the project too). TAP also foresees supplying Bulgaria – through the planned interconnector across the border with Greece. There is not enough volume to make a real difference but still such by-projects will be important in countries bypassed by TAP. Turkey remains a key country, though it is frustrated over Nabucco West’s loss. The other day I heard a senior official from Ankara saying that the selection of TAP will be a reason to push forward with its own interconnector with Bulgaria.
Your message will be submitted to a moderator before appearing online. Name and email address are required, all other fields are optional. Your email will not be displayed.
EU approach to Algeria is short-sighted and neglects long-term domestic stability
Europe must change policy towards Russia to protect partnering countries
Turkey is sliding back on its democratisation path
Landmark in European integration needs reforms
Exploring potential areas of Russian leverage