TAP pipeline director: South Stream is irrelevant

Kjetil Tungland.jpg

As long as the consortium managing the gas from Shah Deniz field in Azerbaijan is ready and willing to guarantee supplies of gas to Italy via the Trans Adriatic Pipeline (TAP), Gazprom's South Stream project "is irrelevant", TAP Managing Director Kjetil Tungland told EURACTIV in an exclusive interview.

Kjetil Tungland joined Norway's Statoil in 1986. In 2003 he was posted to Istanbul where he became Statoil’s country manager for Turkey. In April 2010 he was appointed managing director of TAP, a Joint-venture project with EGL of Switzerland, Statoil and E.ON Ruhrgas of Germany.

He spoke to Georgi Gotev, EURACTIV's senior editor.

Is the decision that TAP, the Trans Adriatic Pipeline, has been chosen by Azerbaijan to build the Greece-Italy link of the southern gas corridor, a final decision? I'm asking, because DEPA, the Greek company that is a stakeholder in ITGI [the Turkey-Greece-Italy Interconnector]. a competitor project, says the decision is "provisional".

I can confirm the following: I have received a letter from SOCAR [the Azerbaijani state gas company]. In the letter, TAP is invited into "exclusive negotiations" with Shah Deniz. The letter also states that the decision, by the Shah Deniz consortium, has been unanimously supported by all the members of the consortium, and that it is final. So the three words "exclusive", "unanimous" and "final" are contained in the letter and it is clear that there is nothing provisional about their decision.

It sounds clear. But DEPA says your project lacks the necessary permits, and hints at combining strengths. Is this an option? 

This is DEPA’s opinion. It's certainly not my opinion, or Shah Deniz's opinion. Shah Deniz has ranked the competing projects according to the eight selection criteria. These include assessing the projects based on their merits as commercial concept, technical capability, operational capability and financial capability. All these elements have been considered and based on this, TAP was chosen. 

Nevertheless, would you need to combine strengths with ITGI or another project?

No, I don't feel such need because now TAP is chosen on the basis of its own strengths and on the strengths of its shareholders. We don't see that we should dilute Shah Deniz's decision by joining forces with ITGI – that would be like taking several steps backwards. We consider the Shah Deniz decision as final. It excludes ITGI, and invites TAP into exclusive negotiations with Shah Deniz, with the intention of reaching final agreement with them.

Can you perhaps explain the situation of other projects, such as Nabucco, which is also bidding for the gas from Shah Deniz II offshore gas field? Because if I understand, SOCAR doesn't want to put all its eggs in one basket.

That is correct. What this decision means is that for the export route to Italy, TAP is invited for exclusive negotiations. For the northern route, Shah Deniz are still evaluating the changed concept of Nabucco, they now known as Nabucco West. Or whether to go for their own SEEP [the South East Europe Pipeline] project.

SEEP is British Petroleum, right?

It was announced at least as such by BP, but I understand the full [Shah Deniz] consortium is behind it. 

According to some reports, SEEP could emerge as favourite.

I don't have that impression. Shah Deniz say they will evaluate SEEP against Nabucco West and make a final selection between the two this summer, in June I think. 

Therefore the southern section is clear, this is TAP, and the northern corridor will be either Nabucco West or SEEP, and the decision would be known by summer?

Yes. And then they have the two agreements, they will also make an evaluation of the buyers and will make a final selection of which route and group of buyers to go for, well in advance of their final investment decision, which is scheduled for June 2013. 

Russia has decided to build South Stream at maximum capacity. Does this decision impact on the southern gas corridor?

No, I don't see any impact whatsoever. As long as Shah Deniz is ready and willing to guarantee supplies of gas to Italy via the TAP pipeline, the South Stream project is irrelevant as far as TAP and Shah Deniz are concerned.

It has just been announced that Gazprom wants to buy DEPA, the Greek gas company, what do you think?

No comment.

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