TAP, TANAP low-risk projects: SOCAR
By Aynur Jafarova
The Trans-Adriatic (TAP) and Trans-Anatolian (TANAP) gas pipeline projects fall into the low-risk category.
The remarks were made by head of Azerbaijan's state energy company SOCAR Rovnag Abdullayev in his recent interview with The Business Year magazine.
"TAP and TANAP are very well positioned due to their strategic importance for Europe's energy security", he said.
Therefore, Abdullayev noted, the projects are supported not only by the participating member countries, but also by the European Union (EU) as a whole.
"Being aware of potential risks and challenges, we constantly work with our partners to identify risks and implement effective risk management strategies, which is an ongoing process", he said.
Abdullayev went on to stress that from an international perspective based on that information, TAP and TANAP fall into the low-risk category.
"However, we are exposed to the risk of rising steel prices due to the lack of long-term hedging instruments," he added.
Another potential risk is the disruption of materials supply at the projects' construction stage, preventing timely execution, Abdullayev said.
"We have understood and evaluated the possible impact of these risks on our projects; therefore, we have taken the appropriate pro-active measures to mitigate them," he noted.
The Shah Deniz field, one of the world's largest gas-condensate fields, was discovered in 1999. Its reserves are estimated at 1.2 trillion cubic meters of gas. The gas which will be produced at the second stage of Azerbaijan's Shah Deniz field development will be the main source of the Southern Gas Corridor, which envisages the transportation of the Caspian gas to European markets.
The Shah Deniz consortium announced the selection of TAP as the main route for transporting its gas to Europe in late June. Azerbaijan agreed to sell over 10 billion cubic meters of natural gas a year from the second phase of its Shah Deniz development to nine companies in the European Union in September 2013.
The initial capacity of TAP will amount to 10 billion cubic meters per annum with the possibility of expanding to 20 billion cubic meters per annum. The TAP's construction project is planned to start in 2015.
TANAP, developed by Azerbaijan's state energy company SOCAR in collaboration with Turkish Botas and the energy company TPAO, will deliver Shah Deniz gas to the Turkish-Greek border from eastern Turkey.
The initial capacity of the pipeline will be 16 billion cubic meters of gas a year. TANAP will link up with Trans-Adriatic (TAP) pipeline on the Turkish-Greek border.
About six billion cubic meters of gas will be delivered to Turkey and the rest to Europe. TANAP shareholders plan to lay the pipeline's foundation in the second quarter of 2014, and commission it in 2018. The costs of the TANAP project are estimated at $10 billion to $11 billion.