Azerbaijan, Baku, Dec. 1 / Trend A.Badalova /
Trend exclusive interview with Managing Director for Trans Adriatic Pipeline (TAP) Robert Klein.
Trend : What are the chances for realization of TAP project today? At what stage is the project now?
Klein: I strongly believe that TAP will be built and that it has the solid foundations for success. In essence, a pipeline can only be built if it has gas. In this regard TAP is very well positioned, with Statoil as a major European gas player with unique experience in development of new pipeline projects and gas value chains, and EGL which has already secured large gas volumes. Both companies are equal 50% shareholders in TAP.
TAP is the most technically advanced project in the Southern Gas Corridor and is designed to maximize the use of existing gas infrastructure thereby ensuring the highest net back value for producers. In fact, TAP is the most commercially attractive pipeline in several ways, but very simply meets the needs of producers, shippers and ultimately of consumers. Furthermore, TAP is the shortest 'new-build' pipeline (520km in length) in the Southern Gas Corridor and has built-in flexibility with the option to easily expand capacity to 20bcm per year from an initial 10bcm. This flexibility ensures that TAP is the only project to able to meet the expanding volumes of gas from Caspian and other sources as they come on stream.
TAP is working on securing the necessary permits required in all three host countries and is well underway on its route refinement process in Italy and Albania. The Swiss government recently signed and MOU with Turkey on securing transit rights for EGL's gas. In terms of schedule, TAP has aligned the completion of its activities with the start of gas production in Shah Deniz II.
So, to summarise, TAP has extremely good chances of being realized based on proven technical and commercial strengths, and most important of all - access to gas supplies.
Q: Have the global financial and economic crisis affected the predicted cost of TAP project and the terms of its realization?
A: TAP is (currently) backed by two very strong and robust shareholders. As with all other projects, we also expect to benefit from the current drop in steel prices. Finally, the very fact that TAP is one of the very few projects committed to meeting the very highest standards with regards to CSR and ESIA principles - in accordance with the EBRD performance requirements - means that we will be in a strong position to secure project financing.
Q: Taking into consideration a large number of projected alternative pipelines within the EU policy of diversification of supply sources and transport routes, do you think there will be enough gas for TAP project? Who are considered to be the main suppliers for this project?
A: Clearly there is not enough gas from Azerbaijan alone to fill all the gas pipelines in the Southern Gas Corridor. The only projects that can succeed will be those that are most competitive to attract volumes and able to secure multiple sources of gas. TAP is in the strongest position as it is the only project so far in the Southern Gas Corridor to have secured gas supplies (currently enough to fill 50% of the pipeline).
Q: What are the advantages of TAP project over the others?
A: I have already outlined many of the advantages of TAP above. However, just to recap, TAP is the shortest pipeline in the Southern Gas Corridor from well head to market. TAP has the advantage of supplying regional markets in South Eastern Europe and onwards to major European markets. It is designed with a maximum capacity of 20 bcm per year and crosses the shallowest part of the Adriatic sea. As TAP is committed to meeting the EBRD performance requirements, it is in a strong position to secure project financing.
Since it uses existing infrastructure, the transit costs will be significantly lower than for new-built pipeline systems. Ultimately, this translates to TAP being able to offer the most cost effective transportation solution for producers and shippers of gas.
Q: What is the importance of Azerbaijan in terms of diversification of Europe's energy supply sources? What is the role of the country in TAP project?
A: I see Azerbaijan as playing a strategic role in enhancing Europe's security of supply and its importance is reflected by the attention given to the country by the EU, its members and the US in particular. In fact, TAP enjoys good relationships with Azerbaijan and SOCAR and has been a major sponsor of several Oil & Gas conferences in Baku this year and an investment summit in London.
In developing TAP, I have always worked on the principle of ensuring that TAP meets the needs of the producers and shippers - something that I know is very important to SOCAR and Azerbaijan. I therefore strongly believe that TAP meets the best interests of Azerbaijan in ensuring the most cost effective, reliable and commercially feasible pipeline to export and monetise its valuable natural resources to Western markets.
P.S: The Trans Adriatic Pipeline is designed to transport gas from the Caspian region and the Middle East to Europe. The pipeline will begin in Greece and run through the territory of Albania and the Adriatic Sea onwards to Italy.
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