Azernews.Az

By Aynur Jafarova

The Albanian parliament unanimously ratified the Host Government Agreement (HGA) between Albania and the Trans Adriatic Pipeline (TAP) project on Monday in Tirana, TAP's website said.

The HGA between the Albanian Ministry of Economy, Trade and Energy and the TAP was signed in early April.

The agreement defines the terms of engagement for the Southern Gas Corridor pipeline's future delivery. Upon approval by the Albanian president, the HGA will become a fully binding law. The HGA sets out the regulations in accord with which the project will be implemented and operated on Albanian territory. This includes the processes of land acquisition, the implementation of technical, safety, environmental and social standards, etc.

"We are impressed by the quick progress with the ratification of the HGA. TAP greatly appreciates the outstanding support Albania has given to our pipeline project, now again confirmed by the Albanian Parliament," TAP Managing Director Kjetil Tungland said.

TAP will be one of the largest foreign investors in Albania, providing a major source of revenue to the country and stimulating employment. Furthermore, it will contribute to the development of Albanian roads and other infrastructure. The project will play a major role in developing Albania's energy market and facilitating the government's objective of becoming a gas hub in the Western Balkan region.

The TAP project is designed to transport gas from the resource-rich Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into western Europe. TAP's initial capacity will be 10 billion cubic meters per year, but it is easily expandable to 20 billion cubic meters.

Nabucco to submit binding bid

Nabucco Gas Pipeline International, the consortium for the rival Nabucco pipeline project, will submit its binding bid for gas from the second stage of Azerbaijani Shah Deniz field development in late April.

Nabucco Managing Director Reinhard Mitschek said that the company prepared a bid in late March and the project's shareholders will approve it in the coming weeks.

Earlier, Nabucco Gas Pipeline International GmbH submitted a Pipeline Decision Support Package to the Shah Deniz Consortium, which contains all of the important elements requested by the producers to establish a commercial value chain for Azerbaijani gas.

Nabucco West is a short-cut version of the Nabucco project, which envisages construction of a pipeline from the Turkish-Bulgarian border to Austria. Gas to be produced within the second phase of Shah Deniz gas condensate field development is considered as the main source for the project.

First gas within Shah Deniz-2 is expected to be produced in 2018.

Currently, the consortium developing Azerbaijan's giant Shah Deniz field in the Caspian Sea is considering both TAP and Nabucco West as options for its gas transportation to Europe. The final decision on the pipeline route will be made in June 2013.

Nabucco West - rival to South Stream

Political risk expert Alexander Jackson believes that the difference between the Nabucco West and TAP projects, which are both part of the Southern Gas Corridor, is that the former will probably appear as a competitor to Russia's South Stream project.

The South Stream project envisions the construction of a gas pipeline across the Black Sea to South and Central Europe countries. Its construction is planned to be completed in 2015. The design capacity of South Stream is 63 billion cubic meters of gas per year, and the estimated cost of the project is 8.6 billion euros.

"Politically, Nabucco West unlike TAP would directly compete with Russia's South Stream by providing the Balkans with Caspian gas," Jackson said.

According to him, it is very unlikely that the Balkans have enough demand for gas from both Nabucco West and South Stream pipelines.

At the same time, Jackon stressed that Nabucco West in contrast to South Stream strengthens European energy security by diversifying the gas supply of the Balkans.

Earlier Reinhard Mitschek, comparing Nabucco West with the South Stream pipeline, said that the ideas behind these two projects are totally different. Nabucco West, according to Mitschek, offers a completely new route -- an alternative route with alternative gas; he expressed hope that market players would find these offers very attractive.

According to Jackson, both the Nabucco West and TAP pipelines will be built in the long term.

"Azerbaijan has plenty of gas over the medium and long term from fields like Absheron, Umid-Babek, and Zafar-Mashal," Jackson said.

"There's certainly no supply shortage, so it is likely that both pipelines could be built -- but only in the long term," he added.

According to Jackson, if Nabucco West is chosen as the final transportation route, in the medium term, it would have its capacity expanded to 31 billion cubic meters (bcm), which would absorb most of the supply.

"It's unlikely that an alternative pipeline would be seriously planned for at least a decade," Jackson added.