BAAR, Switzerland – Commercial operations have started through the 878-km (545-mi) Trans Adriatic Pipeline (TAP) gas transportation system, four and a half years after construction started in Thessaloniki, Greece.
The pipeline system, which crosses Greece, Albania, and a 105-km (65-mi) section of the Adriatic Sea to a termination point in southeast Italy, is the European leg of the Southern Gas Corridor, designed to transport 10 bcm/yr of new gas supplies from Azerbaijan to multiple European markets.
TAP’s partners plan to eventually double the system’s throughput capacity to 20 bcm/yr.
Start-up represents a major milestone for Europe and Italy in particular, according to Wood Mackenzie.
The Eur4.5-billion ($5.34-billion) project provides the first deliveries of contracted Azerbaijani gas – from the BP-operated Shah Deniz II field development in the Caspian Sea – beyond Turkey.
It also opens a fourth gas import pipeline corridor for the European Union, strengthening the region’s energy security.
In addition, Wood Mackenzie research director Murray Douglas said: it “enhances Italy’s supply options as it forges ahead with plans to decarbonize.
“It represents the first major pipeline project not underpinned by contracts with Eni. It will also improve the liquidity of Italy’s PSV gas hub and open more opportunities for south-to-north flows in the country.”
As Douglas pointed out, the main obstruction to the project’s four-and-a-half-year timeline turned out to be the politicization of permitting issues in Italy, although these were largely resolved in 2018.
More recently, the project team had to contend with finishing construction, testing and commissioning amid coronavirus-related restrictions.
“For the Southern Gas Corridor project and its many stakeholders, TAP’s launch is the end of the beginning, not the end itself,” he continued.
“A scenario without TAP expansion to 20 bcm/yr would be a failure against the initial objectives, especially for European supply security.
“All eyes will be on the binding phase of TAP’s market test in summer 2021. This could be a bellwether for the post-lockdown recovery of European gas fundamentals.”
Wood Mackenzie remains positive on future TAP expansion opportunities, although recent events have altered the region’s gas dynamics, notably Turkish Petroleum’s giant gas discovery this summer in the deepwater Turkish sector of the Black Sea.
The initial expectation in 2016 had been for more Azerbaijani gas to drive TAP expansion, but this looks increasingly unlikely, Douglas claimed, due to challenging project economics and better-positioned supply alternatives, which include Russian gas.