How will TAP ultimately change European gas landscape?
BAKU, Azerbaijan, Sept.16
By Leman Zeynalova – Trend:
The 10 Bcm/year that the Trans Adriatic Pipeline (TAP) brings to southern Europe is a drop in the ocean compared with, say, Russian deliveries to Europe, which topped 200 Bcm in 2018, Trend reports citing S&P Global Platts.
“Russia has now had plenty of time to digest the fact that it will lose some market share to TAP in Italy, Greece and — via the Greek interconnector — Bulgaria.
“It is Italy in particular where Gazprom may feel some grief — it was the gas giant’s second-biggest market in 2019 after Germany, with sales of 22.1 Bcm. Other gas suppliers, though, may be pushed out first by TAP, which is likely to offer a baseload-type of supply, with Russia able to retain some share given its low cost of production.
“Overall, it may not be a huge shift for Gazprom, which is, in any case, increasingly looking to China to expand its sales in the coming decade and which is developing its own LNG export capabilities in the Russian northwest. For Italy, it gives it yet another import route to add to those bringing gas from Russia, Algeria, northwest Europe and Libya. And that’s not to mention its three LNG import terminals. There are also plans for a 10 Bcm/year pipeline linking gas fields offshore Israel and Cyprus to Greece and ultimately to Italy — the EastMed pipeline — giving the Italians yet another source of supply. But the landscape for European gas is changing, with increasing calls for it to be grouped together with oil and coal as a dirty fossil fuel that would have to be decarbonized to have a future in Europe. This could rule out the EastMed project before it even starts.
“ In fact, it seems increasingly unlikely that any new mega gas projects in Europe — such as major new pipelines — will see the light of day, and big gas resources in regions such as the East Mediterranean or Black Sea may struggle to win financing. Certainly it’s hard to imagine anything being developed on the scale of the $40 billion Southern Gas Corridor, which would almost certainly be dismissed as uneconomic if it were to be floated as an idea now. It is a long way to transport gas, it travels through many countries — including Turkey which some consider something of a risky transit country — and at current European prices looks very expensive.
“So while it looks like the startup of TAP is falling at an inopportune time for the upstream gas suppliers, with European gas prices having fallen to record lows, prices won’t be this low forever,” said S&P Global Platts.
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