TAP pipeline secures exemption from Third Energy Package

TAP pipeline [Wikimedia]

The Trans-Adriatic pipeline (TAP), representing the European section of the Southern Gas Corridor (SGC) which will bring gas from Azerbaijan, has obtained an extension of the validity period of the project’s exemption from third party access to its pipe.

The regulatory authorities in TAP’s host countries – Greece, Italy and Albania – published a joint opinion on Wednesday (29 April), prolonging the validity period of TAP’s exemption from certain provisions of the EU Gas Directive.

The updated joint opinion follows the approval of the European Commission, as well as a positive opinion by the Energy Community Secretariat. The joint opinion has been implemented in TAP’s host countries via national decisions.

European Union internal market regulation typically requires third party access to all energy infrastructure, including gas pipelines. However, according to the Commission, TAP is a commercial initiative, not incorporated or imposed by any of the countries through which the project runs. Shareholders invest in such a project only if they are assured that potential risks have been cover to a maximum degree. Granting an exemption from EU rules shields private investors from certain risks, and renders such a project feasible, which would not be the case without exemption.

In 2013, TAP secured an exemption from certain provisions of the EU Gas Directive [2009/73/EC], including a third party access exemption for the initial capacity of 10 billion cubic meters annually (bcm/y) for gas volumes from Azerbaijan supplied under the relevant Shah Deniz gas sales agreements over a period of 25 years.

Read: TAP pipeline open to other shareholders, including Iran

The exemption secured in 2013 provided that it would lose its effect in the event that the construction of the pipeline has not started by 16 May, 2016, and that it is not put in operation no later than 1 January, 2019.

Two-year delay

However, the Shah Deniz consortium which will pump the gas offshore the Caspian Sea has notified TAP of a new time window for the operation date, namely from 1 January to 31 December, 2020.

Consequently, the new Commission decision reads that the exemption would lose its effect if the construction of TAP hasn’t stared by 16 May, 2016, and in the event that the infrastructure has not become operational by 31 December, 2020. This in effect postpones the date when the pipeline would become operational by two years.

Tesla pipeline

The decision obviously means that Russia’s Gazprom, which plans to bring gas to the Greek border via the Turkish Stream pipeline, won’t be able to use the TAP pipeline. But Gazprom plans another pipeline, named Tesla, across Greece, Macedonia, Serbia and Hungary, ending in the Baumgarten gas hub in Austria.

The EU supports the SGC and TAP in particular as a project which will bring gas to a region of the EU highly dependent from Russian gas from a source other than Gazprom. Conversely, the Russian aim is mostly to bypass Ukraine, to increase its political clout in all the transit countries – Greece, Macedonia, Serbia and Hungary, and to punish Bulgaria, who stopped the South Stream project.

The delay of the SGC obviously plays in the interest of Russia. However, according to energy experts, SGC and TAP are well-advanced projects, while a hypothetic Tesla pipeline would need up to 10 years to come to life.

The Trans Adriatic Pipeline (TAP), which will carry Azeri gas to European markets, is seen as Europe's alternative to its reliance on Russia.

The pipeline aims to transport gas from Azerbaijan's Shah Deniz II field in the Caspian Sea, one of the world's largest gas fields, by the end of the decade. TAP is part of the Southern Gas Corridor.

The 870 kilometre (545 mile) pipeline will connect to the Trans Anatolian Pipeline (TANAP) near the Turkish-Greek border at Kipoi, and cross Greece and Albania, and the Adriatic, before reaching southern Italy.

The present TAP shareholders are BP (20%), Azerbaijan’s state company SOCAR (20%), Norway’s Statoil (20%), Belgium’s Fluxys (19%), Spain’s Enagás (16%) and Swiss-based Axpo (5%).

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