Why EIB postponed discussions on TAP loan?

Baku, Azerbaijan, Dec.20

By Leman Zeynalova – Trend:

The discussions of the European Investment Bank (EIB) on issuing 1.5 billion euros loan for the Trans Adriatic Pipeline (TAP) project were postponed due to the lack of time to hold proper discussions, Trend learned from EIB.

“The project was presented to the board at its last meeting of the year with a very busy agenda, and the board decided that, given the unexpected length of discussion about other agenda points, there wasn't enough time left for a proper discussion of this important project. Nothing more - nothing sinister and no change in attitude or approach by the Bank,” said the source in EIB.

The due diligence is done and the project is proposed to the Board, said the source, adding that now it is for the Bank's Directors to discuss and decide, which will happen in February at the first meeting of the Board in 2018.

Regarding the Trans Anatolian Natural Gas Pipeline (TANAP) project, the source said it is currently appraising loan to TANAP.

“It will carefully review all the issues raised as part of its intense due diligence procedures. As for all the projects that it finances, the EIB will apply the highest standards in its technical, economic, financial, and environmental and social assessment of this projects. It will ensure compliance with EU and national laws as well as EIB Environmental and Social Standards,” said the source.

The date for the EIB Board discussion of the project is not known yet; the final amount of the Bank’s loan, if any, will be decided by the EIB governing bodies following the satisfactory completion of the ongoing due diligence, added the source.

TAP project, worth 4.5 billion euros, is a part of the Southern Gas Corridor, which is one of the priority energy projects for the European Union. The project envisages transportation of gas from Azerbaijan's Shah Deniz Stage 2 to the EU countries.

The pipeline will connect to the Trans Anatolian Natural Gas Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south.

TAP will be 878 kilometers in length (Greece 550 kilometers, Albania 215 kilometers, Adriatic Sea 105 kilometers, and Italy 8 kilometers).

TAP’s shareholding is comprised of BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).

TANAP project envisages transportation of gas from Azerbaijan's Shah Deniz field to the western borders of Turkey. The gas will be delivered to Turkey in 2018 and after completion of the Trans Adriatic Pipeline's construction the gas will be delivered to Europe in early 2020.

Earlier, Director General of Southern Gas Corridor CJSC Afgan Isayev said the total cost of TANAP (from the start of the pipeline’s construction until the completion of the work and transportation of first gas to Turkey and Europe) has decreased by more than $0.5 billion, as compared to the figure announced last year ($8.5 billion) and amounts to slightly less than $8 billion in accordance with TANAP’s new budget approved in October this year.

The length of TANAP is 1,850 kilometers with an initial capacity of 16 billion cubic meters of gas. Around six billion cubic meters of this gas is meant to be delivered to Turkey, with the remaining volume to be supplied to Europe.

Currently, the shareholders of TANAP are the Southern Gas Corridor CJSC (58 percent), Botas (30 percent) and BP (12 percent).

The World Bank has approved allocation of $800 million to Azerbaijan and Turkey. Of this amount, $400 million was allocated to BOTAS, while the other $400 million was provided to the Southern Gas Corridor CJSC.

Additionally, the Asian Infrastructure Investment Bank (AIIB) has approved allocation of $600 million for the SGC.

A guarantee of allocation of $750 million for SGC has been provided by the Multilateral Investment Guarantee Agency (MIGA).

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Follow the author on Twitter: @Lyaman_Zeyn

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