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28/09/2016

Turkey and Azerbaijan begin construction of TANAP pipeline

Energy

Turkey and Azerbaijan begin construction of TANAP pipeline

Recep Tayyip Erdo?an and Ilham Aliyev [TANAP]

Turkey and Azerbaijan will formally begin construction today (17 March) of a new gas pipeline, which will pump gas from the vast Azerbaijani Shah Deniz 2 field to Turkish and EU consumers.

Turkish President Recep Tayyip Erdo?an and Azerbaijani counterpart Ilham Aliyev will attend the ceremony marking the start of work on the $10 billion pipeline in Turkey’s Kars region, part of a drive aimed at reducing dependence on Russian gas.

The 1,850 kilometre Trans-Anatolian Natural Gas Pipeline (TANAP) pipeline, which is due to be completed in 2018, will link the existing South Caucasus Pipeline (SCP) which connects Turkey to the Azerbaijani gas fields in the Caspian Sea, through Georgia.

TANAP is part of the Southern Gas Corridor, a long-awaited plan to bring gas to Europe from Azerbaijan, and from sources other than Russia (see background).

The backers of the project expect that the TANAP will then link up with the planned Trans-Adriatic Pipeline (TAP) that will bring the gas from western Turkey to Greece, Albania and across the Adriatic, to Italy.

Azerbaijani media have estimated the pipeline’s cost at $10-11 billion, well above initial estimates when the project was first conceived.

According to the partnership agreement signed last week, Azerbaijan’s state energy firm SOCAR and Turkey’s Botas will hold 58% and 30% stakes respectively, while British energy giant BP has a 12 percent share.

“There will be no political obstacle before this project,” Turkish Energy Minister Taner Y?ld?z said at last week’s partnership ceremony. “I hope that we will consume the natural gas from Shah Deniz 2 both in Turkey and Europe by the end of 2018.”

The pipeline should help Turkey and the European Union reduce dependence on imports of gas from Russia by exploiting the Shah Deniz 2 field, which, according to BP, will produce 16 billion cubic metres of gas per year.

However Turkey, whose relations with Moscow have warmed considerably in recent years, is also talking with Russia on a new Turkish Stream pipeline that will pump Russian gas under the Black Sea to its own territory, as well as to Europe.

>> Read: Russia says it will shift gas transit from Ukraine to Turkey

The Turkish Stream pipeline is aimed at replacing Russia’s South Stream project for pumping gas to Europe avoiding Ukraine, which President Vladimir Putin dramatically cancelled last year, citing a lack of cooperation from the EU.

Russia has expressed doubts about the TANAP project with its envoy to the European Union Vladimir Chiz?ov, saying it was “extremely challenging from a technical point of view” and “exorbitantly expensive”.

However, Yildiz said that TANAP was not a rival to Turkish Stream, whose final terms are still being negotiated with Russia.

Background

The Southern Gas Corridor (SGC) refers to the three pipelines, including TAP, which will bring Azeri gas to the EU. The South Caucasus Pipeline Extension from Shah Deniz via Azerbaijan and Georgia, the TANAP pipeline via Turkey, the TAP pipeline starting from Greece and taking the gas further across Albania and an offshore section in the Adriatic to Italy. The first gas is expected to flow via SGC in 2019-2020. A branch is expected to take Azeri gas from Greece to Bulgaria and further north.

Further Reading