BAKU, Azerbaijan, May 15
By Leman Zeynalova – Trend:
The Southern Gas Corridor comprises the following four projects: 1) operation of Shah Deniz natural gas and condensate field and its full-field development; 2) the operation of the South Caucasus Pipeline and its expansion (SCPX ), 3) the construction of the Trans-Anatolian Natural Gas Pipeline (TANAP ) and 4) the construction of the Trans Adriatic Pipeline (TAP).
The projects have an estimated investment cost of approximately $40 billion. Upon completion, the Shah Deniz 2 project will add a further 16 billion cubic meters of natural gas per annum to 10.9 billion cubic meters per annum (maximum production capacity) already produced under Shah Deniz 1 project.
Total length of the newly constructed SCPX, TANAP and TAP pipelines will be more than 3,200 kilometers.
The capacity of SCP and TANAP is expandable at least until 31 billion cubic meters, and this is commercially and legally expandable without additional negotiations with host countries. The capacity of TAP can be doubled, increase by another 10 billion cubic meters and the same goes for TANAP and SCP. It could be increased even further, but that would require negotiations with the host countries.
Azerbaijan’s Southern Gas Corridor closed joint-stock company (CJSC) has invested $9.9 billion in the Southern Gas Corridor (SGC) projects since the start of the project as of April 3, 2020, at the expense of its revenues from the projects, the authorized capital and borrowed funds.
From January 1 to April 1 2020, the company has spent around $29.4 million to finance its share in SGC projects.
No changes are expected in investment plans for the projects due to coronavirus.
The progress in the Stage 2 of development of Shah Deniz, one of the largest gas and condensate fields in the world, is 94.3 percent.
The progress in the South Caucasus Pipeline Expansion and the Trans Anatolian Natural Gas Pipeline (TANAP) is almost 100 percent.
TAP project is 95.1 percent complete as of late April 2020.
On February 20, Italy’s Snam company and Azerbaijan’s state oil company SOCAR signed a cooperation agreement to study the development of renewable gases and use of sustainable energy, with a view to their delivery through the Southern Gas Corridor including TAP in the future.
The agreement between Snam and SOCAR involves collaboration in the areas relating to the energy transition and circular economy: 1) researching and promoting the use of biogas and biomethane, including the potential creation of anaerobic digestion plants. The expertise of Snam’s subsidiary, IES Biogas, can be applied for the design and construction of these plants. Snam and SOCAR plan to evaluate potential co-investment opportunities in this regard; 2) promoting sustainable mobility using compressed natural gas (CNG), liquefied natural gas (LNG) and hydrogen (H2), through the development of new distribution stations, potentially involving Snam’s subsidiary, Cubogas. There is also the possibility of launching partnerships with car manufacturers and developing the retrofit market; 3) studying the opportunities for developing hydrogen production and related infrastructure.
Aside from the host countries, Hungary has said it could start importing 1-2 billion cubic meters of natural gas from Azerbaijan via the Southern Gas Corridor from 2023.
Trans-Anatolian Natural Gas Pipeline (TANAP)
TANAP project envisages transportation of gas from Stage 2 of Azerbaijan’s Shah Deniz field from Georgian-Turkish border to Turkey’s western border. The total cost of TANAP turned out to be lower than $7 billion.
The initial capacity of TANAP is expected to stand at 16 billion cubic meters of gas per year, with possibility of expanding to 31 billion cubic meters per year in the future. Around 6 billion cubic meters of gas will be delivered to Turkey, while the rest of the volume will be supplied to Europe.
Project status
The Trans Anatolian Natural Gas Pipeline is almost 100 percent complete.
TANAP has transported around 5 billion cubic meters of Azerbaijani gas since the start of operation in June 2018 until April 1, 2020. From January through March 2020, the pipeline transported 941 million cubic meters of gas. Starting from late June 2020, the annual transportation volume via TANAP to Turkey will reach 6 billion cubic meters.
Trans Adriatic Pipeline (TAP)
TAP project envisages transportation of gas from Azerbaijan's Shah Deniz Stage 2 to the EU countries. TAP will be 878 kilometers in length (Greece 550 kilometers, Albania 215 kilometers, Adriatic Sea 105 kilometers, and Italy 8 kilometers).
The initial capacity of TAP will be 10 billion cubic meters per year with the possibility of expanding to 20 billion cubic meters.
Project status
All engineering, procurement and construction activities as part of the implementation of the Trans Adriatic Pipeline project continue amid coronavirus.
In Greece and Albania onshore construction and reinstatement are substantially complete. The compressor stations in Fier and Kipoi as well as the metering station and Bilisht are also complete and preparations for the introduction of natural gas continue. In Italy, activities for the completion of the onshore section of the pipeline and the pipeline receiving terminal (PRT) as well as the offshore pipeline construction are ongoing as per the schedule.
On February 18, Albanian ministry of infrastructure and energy cancelled the tender for reviving the Vlora thermal power plant (TPP) and construction of a gas pipeline between Vlora and Fier to link the plant to the Trans Adriatic Pipeline. Reportedly, the ministry said none of the submitted bids met the criteria in the tender. Albanian government intends to put into operation the Vlora TPP by feeding it with gas from TAP. The construction of Vlora TPP was completed in 2011 and was never put into operation due to technical problems. The TPP was built with financing from the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank.
On March 26, TAP announced that the Pipeline Receiving Terminal in the municipality of Melendugno, Italy, 8.2 km away from the coast, is 83 percent complete. TAP section from the microtunnel to the PRT is 70 percent complete.
After publishing the draft project proposal for incremental capacity together with Snam Rete Gas and DESFA on 20 January 2020, TAP intends to proceed with the subsequent phases of the market test, in line with the Guidelines for the 2019 Market Test of Trans Adriatic Pipeline, approved by the National Regulatory Authorities of Greece, Italy and Albania.
It is planned to introduce the first gas in the Trans Adriatic Pipeline sections in Albania and then in Italy in coming weeks and months.
On March 31st, PRISMA European Capacity Platform GmbH and Trans Adriatic Pipeline (TAP) AG signed an agreement that will open up TAP´s future transportation capacity marketing activities on the PRISMA platform, where transmission system operators, storage system operators and shippers market gas capacity at both primary and secondary market levels,
TAP’s market test regarding potential further expansion is currently in progress.
The construction of the Trans Adriatic Pipeline’s offshore section between Albania and Italy was announced completed by Spanish Enagas, one of the TAP shareholders, on April 23. The project was implemented by Italy’s Saipem company with Castoro Sei pipe-laying barge.
TAP’s offshore section, linking the Albanian and the Italian coasts, is 105 km long. The pipes were laid on the Adriatic seabed: 37 km in Albanian territorial waters, 25 km in Italian territorial waters; and 43 km in international waters. The deepest point of the pipeline is more than 810 metres beneath sea level. Approximately 9,000 pipes, with a 36-inch diameter, will be used, weighing approximately 100,000 tonnes in total.
Until the commercial operation day (COD), the project commissioning, Spanish Enagás will contribute further with approximately 20 million euros in capital to the Trans Adriatic Pipeline. Enagas’ total investment in TAP is expected to reach around 230 million euros, in line with the capital structure contemplated in the project.
Partial and full expansion options have been identified for the Trans Adriatic Pipeline . TAP pipeline expansion can be achieved by installing additional compressor units at the compressor stations GCS00 (Kipoi) and ACS03 (Fier) and by the construction of the additional compressor stations GCS01 (Serres) and ACS02 (Bilisht). No modifications are required to pipeline sections between compressor stations.
The pipeline will initially be pressured to 40 bar to allow the completion of facility commissioning, then the whole pipeline will be filled to a pressure of 65 bar to achieve Commercial Operations.
At the end of April 2020, the the Trans Adriatic Pipeline (TAP) project was 95.1 percent completed.
Baku-Tbilisi-Erzurum (South Caucasus Pipeline)
In the first quarter of 2020, South Caucasus Pipeline (SCP) spent about $12 million in operating expenditure and about $2 million in capital expenditure in total.
During the quarter, the daily average throughput of SCP was 33.6 million cubic metres of gas per day.
The SCP has been operational since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey. The expanded section of the pipeline commenced commercial deliveries to Turkey in June 2018.
The SCP Co. shareholders are: BP (28.8 percent), TPAO (19 percent), AzSCP (10 percent), SGC Midstream (6.7 percent), PETRONAS (15.5 percent), LUKOIL (10 percent) and NICO (10 percent).
Interconnector Greece-Bulgaria (IGB)
IGB is a gas pipeline, which will allow Bulgaria to receive Azerbaijani gas, in particular, the gas produced from Azerbaijan's Shah Deniz 2 gas and condensate field. IGB is expected to be connected to TAP via which gas from the Shah Deniz field will be delivered to the European markets.
The pipeline’s length will be 182 kilometers.
In the first stage, the pipeline capacity will be 3 billion cubic meters of gas, of which 2.7 billion cubic meters will be offered for long-term market, the remaining share of 0.3 billion cubic meters for short-term market.
In a second phase, depending on the evolution of the market, the capacity of the pipeline can be increased to 5.3 billion cubic meters of gas thanks to the addition of a compression station: 4.5 billion cubic meters of gas will be offered for long-term market and 0.5 billion cubic meters will be offered for short-term market.
Project status
In January 2020, the Greek company Corinth Pipeworks completed the production of 47 km line pipes for the route of the Greece-Bulgaria gas interconnector. The first batch consists of 32-inch in diameter line pipes with external three-layer polyethylene coating.
The first batch of pipelines, which will be used to build the Greek section of the Interconnector Greece-Bulgaria, arrived at the port of Alexandroupolis in March 2020.
Corinth Pipeworks is currently working on deliveries for Milestone 2. Expected completion date is May 30, 2020.
The length of the entire pipeline route is 183 km and a contract for the manufacture of nearly 185 km of line pipes has been signed.
The production of the IGB line pipes is being carried out at the company's plant in Boeotia, Greece, with a production capacity of over 1 000 000 tons per year.
The production of line pipes for the purposes of the gas interconnector with Greece is divided into five batches. The route will be constructed both with longitudinal submerged arc-welded pipes and helical submerged arc-welded pipes. All pipes will be 32 inches in diameter, 12 m or 18 m in length, and will vary between 11 mm and 20 mm in thickness depending on the section of the route. 18 m line pipes of this type will be used for the first time in Bulgaria. The longer length provides a number of advantages, including optimization of welding costs and a faster installation process. Another proven benefit of using 18 m pipes is the significantly smaller number of maintenance areas during pipeline operation.
Commercial Operation Date (COD) of the Interconnector Greece-Bulgaria is set for the second quarter of 2021.
The interconnector’s construction was commenced on Oct.28, 2019 and the duration is 18 months.
During the initial market test the capacity that was booked for forward flow was 1.57 billion cubic meters per year in the direction from Greece to Bulgaria.
The non-exempted capacity, around 1.43 billion cubic meters per year will be allocated via auction procedures on capacity booking platform strictly following EU regulations from Commercial operation date.
In order to assess the demand for the Expansion Capacity, the National regulator authorities require the IGB to organize an additional market test.
The market test should be organized no later than three years after the start of the IGB’s commercial operation.
Currently a date for market test related to additional capacity has not been fixed. In any case new market tests shall be organized only after the ICGB company is certified as Independent transmission operator (ITO) provided that all requirements for certification are met. This is also required by the Exemption decision. Due to that new market tests shall be organized when IGB obtains the ITO certification.
The European Investment Bank (EIB) loan to finance the Gas Interconnector Greece-Bulgaria is fully signed and available to be disbursed to the project promoter in accordance with the physical implementation of the project (i.e. in tranches) and upon fulfillment of all the necessary conditions at each stage in line with the EU Directives and EIB polices.
IGB contractors have taken measures to reassess the activities on the project and to reorganize them in such a way that allows progress on the realization of IGB to continue despite the difficult times.
Manual welding works on the Interconnector Greece-Bulgaria are expected to start by mid-May.
Certification activities related to welding activities - automatic, semi-automatic are carried out on the territory of the Hellenic Republic. Manual welding certification is completed. IGB is awaiting 3.2 certificates according EN 10204 for the welding consumables. Upon receiving all necessary paperwork, manual welding activities could commence.
Approximately 20 percent of the Detailed Engineering has been completed so far. The emphasis is put on the linear part (pipeline) in order to allow start of construction in several spreads simultaneously as initially planned.
In both Greece and Bulgaria RoW clearance activities have been carried out.
For Bulgarian territory - 25 900m and 1400m pipe stringing are completed. RoW clearance and acceptance of line pipes (Milestone 2) are ongoing in Greece. As of 12.04, there are 8530m RoW completed for Greek territory.
Ionian Adriatic Pipeline (IAP)
Ionian Adriatic Pipeline can be connected to the Trans Adriatic Pipeline (TAP) to transport gas to many countries in South-East Europe.
The pipeline with total length of 516 kilometers will stretch from Albania through Montenegro, and Bosnia and Herzegovina, to split in Croatia.
The capacity of the pipeline will amount to five billion cubic meters of gas per year.
Project status
The European Commission recognises the importance of the Ionian-Adriatic Pipeline (IAP) for the regional gas market, in particular Croatia, Albania, Montenegro and Bosnia and Herzegovina.
As a signal of its relevance for the region, the Commission has awarded IAP the status of Project of Mutual Interest (PMI), category of infrastructure projects that includes those that benefit one or more Contracting Parties(Western Balkan countries, Ukraine, Moldova, Georgia) and one or more Member States but do not have a Project of common interest (PCl) status in the European Union, in line with the Regulation (EU) 347/2013.
Given its PMI status, Commission’s funding under specific programmes, such as the Instrument for Pre-accession Assistance (IPA), could be explored for the support of the construction of IAP in the Western Balkan countries.
Trans-Caspian Gas Pipeline
Turkmenistan is studying the possibility of delivering its energy resources to the European market. To this end, it promotes the project for construction of the Trans-Caspian Gas Pipeline to the coast of Azerbaijan, from where the Turkmen gas can be delivered to Turkey and further to Europe.
The Trans-Caspian Gas Pipeline project may be implemented as part of the Southern Gas Corridor.
Project status
The European Commission said in March 2020 that no talks are currently on-going with Turkmenistan or Azerbaijan on the Trans Caspian Pipeline.
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