The decade-long battle to pipe Azeri gas to the European Union has been won by the Trans-Adriatic Pipeline (TAP), a consortium of Norwegian, German and Swiss companies.
TAP’s victory dashes the immediate hopes a project long advocated by the EU, the Nabucco pipeline. However, Azerbaijan and the European Commission have both indicated that they expect enough gas will eventually be available to convince Nabucco’s backers to continue with their plan.
TAP will carry Azeri gas from Turkey’s border to Greece to the southern tip of Italy, passing through Albania and through the Adriatic Sea.
Nabucco’s original plan was to build a pipeline all the way from eastern Turkey to central Europe, but it dramatically reduced its plans after Turkey and Azerbaijan agreed in mid-2012 to build a pipeline themselves, called the Trans-Anatolia Pipeline (Tanap).
Its truncated plan – known as Nabucco West – envisaged carrying gas from Turkey’s border with Greece through Bulgaria, Romania and Hungary to the gas-transport hub of Baumgarten in Austria.
The decision to opt for the southern option, TAP, was made by the consortium that is developing the giant Shah Deniz II field in the Azeri waters of the Caspian Sea. Its leading members are Azerbaijan’s state-owned SOCAR, Norway’s Statoil and BP, a multinational energy giant.
BP, which leads the Shah Deniz consortium, has said that the Shah Deniz II gas field is the biggest gas discovery it has ever made and the most complex project that it has taken on.
The EU currently receives about 2.5 billion cubic metres (bcm) of gas from Azerbaijan, via Turkey. TAP is designed to be able to carry 10 to 20 bcm per year. Azerbaijan believes it will ultimately be able to pipe a total of 50 bcm per year to Turkey and the EU.
The European Commission had no role in the selection and was officially neutral, but Nabucco had benefited from the advocacy of several European commissioners because it was seen as a means of reducing the dependence of several EU member states – Romania, Bulgaria and Hungary – on Russian gas.
Nabucco’s prospects began to buckle several years ago when would-be investors baulked at the cost of the original plan for a 3,900 kilometre pipeline and Azerbaijan’s decision in 2011 to look to build a pipeline itself with Turkey effectively took a major geopolitical element in strategic thinking out of the EU’s hands.
The shortened version of Nabucco – Nabucco West – in 2012 beat off a rival northern route, the South-East Europe Pipeline (SEEP), to make it into the final selection round. This pitted it against the winning southern option, TAP, a less ambitious plan put together by Norway’s Statoil, Switzerland’s Axpo and Germany’s E.ON.
TAP will link up with the Ionian pipeline, which runs along the Adriatic from Slovenia to Austria. This in turn will provide Bosnia to a supply not controlled by Serbia or Russia.
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TAP is expected to be built by 2019.