Iran’s connecting TAP and TANAP to strengthen Azerbaijan’s regional positions

Baku, Azerbaijan, Aug. 5

By Anvar Mammadov - Trend:

Iran's connecting to TAP and TANAP gas pipelines will strengthen Azerbaijan's regional positions as a transit country, expert Farhad Amirbayov said.

"It is hard to say whether Iran will be connected to TAP and TANAP projects as a result," the expert said. "But in a positive case, this will strengthen the regional position of Azerbaijan as a transit country. More countries will be interested in its well-being. Even if the economic benefits of this project are modest for us, the political dividends will be much more significant. In any case, this is success."

Amirbayov also discussed Iran's entering the world oil market and its impact on the oil price.

"I do not believe in a rapid effect from cheap Iranian oil," he said. "Being under the strict "anti-nuclear" Western sanctions for about 10 years, Iran, however, was selling its oil. Any country under sanctions, sells its main export commodity, covered by the sanctions, cheaper than it could have sold in a normal situation. When the sanctions are lifted, the proceeds from the sale of Iranian oil will increase.

"Iran will be able to sell at the current price the volumes of oil, which it was selling to intermediaries at a very low price, and there will be no need for a long chain of intermediaries," he said. "Therefore, there will be no price shock from Iranian oil entering the market, Iran will demand a fair price."

The expert also said that Iran cannot immediately start to supply large volumes of oil to the world market because of the imperfect state of its mining infrastructure.

"It is impossible to restore the extraction of natural resources in the short term, as a rule," said Amirbayov. "This is only possible if one's mining infrastructure and equipment are in perfect working order, and there are many doubts regarding this fact. Therefore, Iran will try to get the investment to restore its oil infrastructure. For the mining industry, the life under sanctions for 10 years is a very long time. Oil and related substances lead to a big corrosion of materials from which machinery and equipment for oil and gas fields are made. From a technical point of view, Iran will not be able to quickly bring its oil to world markets."

TAP will transport natural gas from the giant 'Shah Deniz 2' field in Azerbaijan to Europe.

The approximately 870 km long pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

The pipeline's construction is expected to start in 2016.

TAP's initial capacity will be 10 billion cubic meters per year, expandable to 20 billion cubic meters per year.

TAP's shareholding is comprised of BP (20 percent), SOCAR (20 percent), Statoil (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).

TANAP project envisages transportation of gas of Azerbaijan's Shah Deniz field from the Georgian-Turkish border to the western borders of Turkey.

TANAP's initial capacity is expected to reach 16 billion cubic meters of gas per year. Around six billion cubic meters of this gas will be delivered to Turkey and the rest of the volume to Europe.

Turkey will obtain gas in 2018, while Europe will get it in early 2020 after the Trans Adriatic Pipeline (TAP) is constructed.

BP and the TANAP consortium signed a shareholder agreement March 13, according to which BP will become one of the shareholders of TANAP. The agreement is one of the main documents for BP's ownership of a stake in the TANAP project.

Following the completion of a legal implementation procedure, TANAP's shareholders list will be as follows: SOCAR - 58 percent, Botas - 30 percent and BP - 12 percent.

Iran and "Six" international mediators (five permanent members of the UN Security Council and Germany) completed working out the agreements on the settlement of the nuclear problem of the Islamic Republic on July 14.

As a result, a joint comprehensive action plan, consisting of a main document and five technical annexes, was coordinated.

Edited by CN

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Follow the author on Twitter: @Anvar_Mammadov

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