SOCAR head: TAP, TANAP are low-risk projects

Baku, Azerbaijan, May 14

By Aygun Badalova -Trend:

Trans Adriatic Pipeline and Trans-Anatolian gas pipeline projects fall into the low-risk category, the head of the State Oil Company of Azerbaijan (SOCAR) Rovnag Abdullayev said in interview to The Business Year magazine.

"TAP and TANAP are very well positioned due to their strategic importance for Europe's energy security policy", he said.

Therefore, Abdullayev stressed, the projects are supported not only by the participating member countries, but also by the EU as a whole.

Taking into account the sheer scale of investment, the number of companies involved, and the diversity of countries, projects such as TANAP and TAP usually present major challenges on their own, according to Abdullayev.

"Being aware of the 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.

"From an international perspective based on that information, TAP and TANAP fall into the low-risk projects category. However, we are exposed to the risk of rising steel prices due to the lack of long-term hedging instruments," Abdullayev added.

Another type of common potential risk, according to Abdullayev, is the disruption to materials supply at the construction stage of projects, preventing timely execution.

"We have understood and evaluated the possible impact of these risks for our projects; therefore, we have taken the appropriate pro-active measures to mitigate them", he said.

The TANAP project envisages gas transportation from the Azerbaijani Shah Deniz field to Europe via Turkey.

The pipeline's initial capacity is expected to reach 16 billion cubic meters per year. Around six billion cubic meters will be delivered to Turkey and the rest to Europe. In future, the pipeline's capacity can be expanded to 31 billion cubic meters of gas per year.

The final investment decision was made on the second phase of the Azerbaijani Shah Deniz offshore gas and condensate field's development on December 17, 2013.

The gas to be produced within the second phase of the field's development will be exported to Turkey and to European markets by means of expanding the South Caucasus Pipeline and construction of the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP).

The initial capacity of TAP will be 10 billion cubic meters per year, but it can easily be expanded to 20 billion cubic meters per year.

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