Status of Southern Gas Corridor projects for 2021

Oil&Gas Materials 28 December 2021 17:42 (UTC +04:00)
Status of Southern Gas Corridor projects for 2021

BAKU, Azerbaijan, Dec.28

By Leman Zeynalova - Trend:

Southern Gas Corridor (SGC) started transportation of Azerbaijani gas to Europe on December 31, 2020. It transports of gas from the Caspian Sea region to European countries through Georgia and Turkey.

This large-scale project is aimed at diversification of energy supply routes and sources, thereby contributing to strengthening Europe’s energy security. The project’s cost totaled $33 billion, as compared to the forecast $45 billion. Capital expenditures on the SGC project are expected to be fully reimbursed within 8-10 years.

Trans-Anatolian Natural Gas Pipeline (TANAP)

TANAP transports gas from Stage 2 of Azerbaijan’s Shah Deniz field from Georgian-Turkish border to Turkey’s western border. The total cost of TANAP turned out to be lower than $7 billion.

The initial capacity of TANAP is 16 billion cubic meters of gas per year, with possibility of expanding to 31 billion cubic meters per year in the future. Around 6 billion cubic meters of gas is supposed to be delivered to Turkey, while the rest of the volume is supplied to Europe.

TANAP shareholders are as follows: Southern Gas Corridor CJSC – 51 percent, SOCAR Turkey Enerji – 7 percent, BOTAS – 30 percent and bp – 12 percent.

Line fill began in the TANAP pipeline across Turkey in late January 2018.

A ceremony to launch Phase 0 of TANAP took place June 12, 2018 in the Turkish city of Eskisehir. First commercial gas deliveries to Turkey commenced on June 30, 2018. The opening ceremony of TANAP’s connecting with Europe took place on Nov. 30, 2019 in Ipsala town (Edirne province, Turkey).

For expansion, it is necessary to add several additional compressor stations in order to achieve throughput of 24 billion cubic meters per year. To achieve capacity of 31 billion cubic meters, a total of seven compressor stations will be required.

Project status

From July 2018 through December 2021, 13.6 billion cubic meters of natural gas were transported to Turkey via TANAP pipeline. In the first 11 months of this year, 5.1 billion cubic meters of 7.7 billion cubic meters of natural gas were transported to Turkey via the pipeline. In 2023, Azerbaijan plans to increase gas exports to 13 billion cubic meters.

In July 2020, the Trans Anatolian Natural Gas Pipeline reached the maximum level of daily gas flow. TANAP started with a daily gas flow of 4.7 million cubic meters on 30 June 2018. This volume started to increase gradually. On 1 July 2019, it reached 11.3 million cubic meters and on July 1, 2020, it reached the maximum level with 17 million cubic meters.

In July 2020, the European Investment Bank (EIB) disbursed $270 million worth loan to Turkey’s BOTAS Petroleum Pipeline Corporation for the Trans Anatolian Natural Gas Pipeline.

The funds were allocated in accordance with the loan agreement signed back on December 20, 2018. The loan has a final maturity of 18 years with 5 years grace period.

Test gas supplies from Azerbaijan’s Shah Deniz 2 to Europe started via the Trans Anatolian Natural Gas Pipeline in September 2020.

Trans Adriatic Pipeline (TAP)

TAP project envisages transportation of gas from Azerbaijan's Shah Deniz Stage 2 to the EU countries. TAP is 878 kilometers in length (Greece 550 kilometers, Albania 215 kilometers, Adriatic Sea 105 kilometers, and Italy 8 kilometers).

The initial capacity of TAP will be 10 billion cubic meters per year with the possibility of expanding to 20 billion cubic meters.

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

TAP can also ensure gas supply to several countries in South-East Europe, including Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, Croatia and other countries by connecting to the Ionian Adriatic Pipeline (IAP).

Bulgaria can receive gas via the Interconnector Greece-Bulgaria (IGB).

Some large European markets, such as Germany, France, UK, Switzerland and Austria can receive gas from Italy, which is the end point of TAP.

Project status

Following the start of commercial operations on November 15, 2020, the Trans Adriatic Pipeline (TAP) AG confirmed on December 31, 2020 the commencement of gas flows from Azerbaijan. The first gas reached Greece and Bulgaria, via the Nea Mesimvria interconnection point with DESFA, as well as Italy, via the Melendugno interconnection point with SNAM Rete Gas (SRG). Total project cost for TAP stood at 4.5 billion euros.

The Trans Adriatic Pipeline will supply 13 percent of natural gas to Italy in 2022, 20 percent to Greece and 33 percent to Bulgaria.

Between January 1 and March 31, the Trans Adriatic Pipeline delivered a total of 1.16 billion cubic meters of gas in its target markets.

On May 15, 2021, the Trans Adriatic Pipeline consortium, DEPA, Advent Technologies, Damco Energy (Copelouzos Group), the PPC, the DESFA, Hellenic Petroleum, Motor Oil, Corinth Pipeworks and Terna Energy applied to the Greek government and the EU for getting this status for the White Dragon project. The White Dragon leans on solar energy for the production of hydrogen. The project involving photovoltaic facilities with an overall capacity of 1.5 GW is estimated to be worth EUR 2.5 billion.

On May 19, 2021, Trans Adriatic Pipeline and ICGB AD, a project company for construction of the Interconnector Greece-Bulgaria (IGB), signed a Services Agreement. According to the agreement, necessary pressure levels for transmission from TAP through IGB to the entry point with the transmission network of Bulgartransgaz EAD will be provided.

On July 7, TAP consortium and Albanian government signed an agreement for the construction of the first gas outlet point in Fier. Reportedly, this agreement will pave way for gasification of Albania and will facilitate its turning into an exporter in the future. This gas outlet point is said to enable gasification of southern Albania from Fier-Vlora pipeline.

On July 24 and July 25 TAP reached the highest nomination at interconnection point Kipoi, Greece. The nomination stood at 332 GWh/d (approx. 28,19 MNm3/d), which corresponds to around 95 percent of the interconnection point's technical capacity.

During the first six months of TAP’s operation, the average utilization of the infrastructure has been in line with plan, reaching 78 percent in June. The operational availability of the infrastructure in the period was 100 percent.

On September 16, 2021, the TAP AG confirmed that a total of 5 bcm of natural gas from Azerbaijan has reached Europe via the interconnection point of Kipoi, at the Greek-Turkish border, where TAP connects to TANAP.

Between 12 October 2021 and 11 November 2021, Trans Adriatic Pipeline AG undertook a public consultation on proposed revisions to the TAP Network Code. The proposed amendments, the supporting rationale for those amendments and an estimated timeframe for implementation of those amendments were summarized in a Revision Proposal.

In line with the strategy of the Trans Adriatic Pipeline consortium to leverage technology and drive continuous improvements, there will be several tenders in the area of digitalization.

On October 29, 2021, TAP consortium noted that it has received non-binding connection requests to the pipeline in Albania. The requests are as follows: Exit Kucove – 7,500,000 KWh/d; Exit Relievi Roskovec – 7,500,000 KWh/d; Exit Fier – 7,500,000 KWh/d and Entry Fier – 1.8 bcm.

The Trans Adriatic Pipeline consortium received non-binding capacity requests. The requests are as follows:

1. Interconnection Point (IP) Kipoi (TAP entry) - 5,500,000 KWh/d for the period 2024/25 – 2030/31.

2. IP Melendugno (TAP Exit, SRG entry) – 15,000,000 KWh/d for the period 2021/22 – 2030/31.

3. IP Nea Mesimvria (TAP entry) – 15,000,000 KWh/d for the period 2021/22-2023/24 and 30,000,000 KWh/d for the period 2023/24 to 2030/31.

4. Relievi Roskovec (TAP exit - Albania) – 5,500,000 KWh/d for the period 2024/25 until 2030/31.

5. Kucove (TAP Exit – Albania) – 7,500,000 KWh/d for the period 2023/24 until 2030/31.

6. Fier (TAP Exit – Albania) – 7,500,000 KWh/d for the period 2023/24 until 2030/31.

Considering the nomination levels for the first week of December, the volume of gas transportation via the Trans Adriatic Pipeline is expected to reach approximately 7.8 billion cubic meters by the end of 2021. The total amount of gas transported by the end of 2021 will depend on the nominations made by TAP’s shippers. By early-December, TAP transported over 7 billion cubic meters of gas from Azerbaijan to Europe. By diversifying the sources of supply, TAP brought increased liquidity to selected European gas markets. The gas transported by TAP also contributed to narrowing the spread between the Italian PSV and the Dutch TTF gas benchmark prices, without which the gas price in Italy would probably have been even higher.

TAP’s expansion capacity is offered to the market through regular market tests. The market test is the regulated process through which shippers can get access to new, long-term capacity in TAP. TAP’s capacity can be expanded up to 20 bcm/a. The capacity of the pipeline can be increased in stages; for instance: limited expansion (approx. 14.4bcm/a), partial expansion (approx. 17.1bcm/a) or full expansion (approx. 20bcm/a).

The capacity expansion timeline will depend on the selected technical solution, as well as the actual capacity that TAP needs to make available as a result of the market test. TAP will expand its capacity to accommodate binding commitments for long-term capacity if the market test results in an economically viable outcome (in accordance with the TAP regulatory framework). The 2021 TAP market test is currently in progress. The non-binding phase of the 2021 market test was launched on 12 July 2021. The Demand Assessment Report of TAP, Snam Rete Gas (SRG) and DESFA was published on 25 October 2021.

Since the start of commercial operations on 15 November 2020, TAP has been making available the entire transportation capacity of 10 billion cubic meters per year.

For the full expansion and the possible doubling of the Trans Adriatic Pipeline initial capacity of 10 bcm/a (approx. 20bcm/a), two additional compressor stations will have to be built to handle the additional volume of gas to be transported via the pipeline: one in Serres, Greece, and one in Bilisht, Albania. Moreover, additional compressors and equipment will need to be installed at TAP’s two existing compressor stations, in Kipoi, Greece and Fier, Albania. Please note that TAP’s expansion does not entail the installation of new pipelines.

The results of the 2021 preliminary assessment of hydrogen readiness confirm that the Trans Adriatic Pipeline has the potential to transport hydrogen blends in the future.

In light of the positive outcome of the study, TAP may initially target to introduce up to 10 percent volume blends of hydrogen. Any further incrementally higher percentages will depend on further research and development and regulatory developments. The timeline for the first introduction of hydrogen into TAP is contingent on a wide range of factors, especially regulatory developments, as well as the evolution of the hydrogen market.

Therefore, in 2022, TAP shall proceed with the next steps in planning, developing studies and testing pipeline materials and welding, in coordination with its adjacent transmission system operators, the governments of TAP’s host countries and other relevant stakeholders.

The TAP security performance benchmark is in line with international best practice and globally recognized industry security standards. TAP adopts a layered, integrated approach to security, centred around risk assessment, physical and cyber security measures, and close collaboration with our host governments

Baku-Tbilisi-Erzurum (South Caucasus Pipeline)

The SCP Co. shareholders are: bp (28.8%), TPAO (19.0%), PETRONAS (15.5%), AzSCP (10.0%), NICO (10.0%), LUKOIL (10.0%) and SGC Midstream (6.7%).

In the first three quarters of 2021, SCP spent around $39 million in operating expenditure and around $8 million in capital expenditure in total.

The SCP has been operational since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey. The expanded section of the pipeline commenced commercial deliveries to Turkey in June 2018 and to Europe in December 2020.

During the three quarters, the daily average throughput of SCP was 46.8 million cubic metres of gas per day.

On 1 August 2021 the transition of the technical operatorship of the South Caucasus Pipeline Company (SCPC) from BP Exploration (Shah Deniz) Limited to SOCAR Midstream Operations LLC was finalized. The transition process which started in March 2020 was successfully completed in July 2021. Despite the challenges caused by COVID-19 bp and SOCAR worked in close collaboration to effectively implement all the aspects of the process.

The transfer of technical operatorship was carried out in fulfilment of the obligations undertook in the revised SCPC Pipeline Owners’ Agreement, signed in December 2013 as part of the Final Investment Decision on the Shah Deniz Stage 2 and South Caucasus Pipeline Expansion (SCPX) projects.

Project status

Azerbaijan exported over 28.432 billion cubic meters of gas via the Baku-Tbilisi-Erzurum pipeline in 10M2021, which is 20.42 percent or 8.823 billion cubic meters more than the same period last year. Baku-Tbilisi-Erzurum pipeline accounted for 50.5 percent of all gas transported by Azerbaijan, which is 8.8 percent compared to the same period last year.

Azerbaijan and Turkey have reached an agreement for supply of additional 11 billion cubic meters of gas via the Baku-Tbilisi-Erzurum pipeline. The 2001 contract for delivering 6.6 billion cubic meters of gas per year to Turkey from Azerbaijan expired on April 16, 2021.

Interconnector Greece-Bulgaria (IGB)

IGB is a gas pipeline, which will allow Bulgaria to receive Azerbaijani gas, in particular, the gas produced from Azerbaijan's Shah Deniz 2 gas and condensate field. IGB is expected to be connected to TAP via which gas from the Shah Deniz field will be delivered to the European markets.

The pipeline’s length will be 182 kilometers.

In the first stage, the pipeline capacity will be 3 billion cubic meters of gas, of which 2.7 billion cubic meters will be offered for long-term market, the remaining share of 0.3 billion cubic meters for short-term market.

In a second phase, depending on the evolution of the market, the capacity of the pipeline can be increased to 5.3 billion cubic meters of gas thanks to the addition of a compression station: 4.5 billion cubic meters of gas will be offered for long-term market and 0.5 billion cubic meters will be offered for short-term market.

Bulgarian Energy Holding EAD (BEH EAD) holds 50 percent of this project, while the remaining 50 percent is owned by Greek DEPA and Italian Edison.

In January 2014, the Trans Adriatic Pipeline AG (TAP) and Interconnector Greece-Bulgaria (ICGB) signed a Memorandum of Understanding and Cooperation (MOUC) aimed at establishing the technical cooperation in order to further develop strategic infrastructure in the region.

The total investment cost of the project is estimated at around 240 million euros (excluding VAT), of which 220 million euros account for capital expenditures.

Bulgarian government has approved the state guarantee in the amount of 110 million euros for the project. ICGB AD company has received up to 45 million euros, under the European Energy Program for Recovery.

Project status

The foundation laying ceremony of the IGB was held on May 22, 2019 in Bulgaria.

In January 2021 the ICGB AD, the project company said that the production and deliveries of all line pipes (187 km) were completed.

On January 27 Greece's parliament ratified the bill authorizing the construction of the Interconnector Greece-Bulgaria.

In March Bulgartransgaz announced the entry and exit capacity of IGB. The entry capacity of Interconnector Greece-Bulgaria is expected to stand at 96,685 MWh/d in 2021. IGB’s entry capacity is estimated at 96,685 MWh/d in 2022, 96,685 MWh/d in 2023, 96,685 MWh/d in 2024 and 96,685 MWh/d in 2025. Exit capacity is expected to amount to 21,174 MWh/d in 2021, 21,174 MWh/d in 2022, 21,174 MWh/d in 2023, 21,174 MWh/d in 2024 and 21,174 MWh/d in 2024. These capacities at entry and exit point are design ones and may change after being commissioned.

In March the project company noted that geodetic survey for the Interconnector Greece-Bulgaria was completed together with clearing of the entire 182 km route.

ICGB AD was granted the first major instalment from the approved funding under the Operational Program Innovation and Competitiveness (OPIC). EUR 28 499 999 were transferred to the project company for the implementation of the interconnector Greece-Bulgaria following a thorough compliance check of the tender procedure related to the line pipe production and delivery and subsequent review of the documentation related to the execution of the contract.

Germany-based Vier Gas Transport GmbH was awarded a contract for the Interconnector Greece-Bulgaria. The company won a tender for a commercial dispatching center technical consultant for IGB and enhancement of the IGB network code. The contract was awarded in accordance with the decision of ICGB AD dated March 10.

As of April 30, 2021, two tranches from the European Investment Bank totaling EUR 60 million were received under the EIB loan. They are at a fixed interest rate with a maturity of 25 years and a grace period of 5 years.

A short-term overdraft loan for the Interconnector Greece-Bulgaria was provided by DSK Bank of Bulgaria. The total amount of the loan stands at 40 million euros. The funding required for the completion of the IGB project is already fully secured.

Half of the capacity of the Interconnector Greece-Bulgaria has already been reserved. With the commissioning of the IGB and the second market test, the entire capacity of the pipeline will be reserved.

In June the construction and installation works started on the gas metering station in Stara Zagora and the dispatch center near Haskovo as part of the Interconnector Greece-Bulgaria project.

In July 2021, it was announced that Linden Energy, a U.S.-based energy development company, will utilize 10 percent of the Interconnector Greece-Bulgaria’s capacity.

In July 2021, one of the two most complex stages in the construction of interconnector Greece-Bulgaria (IGB) was successfully completed – the HDD crossing of the pipeline under Maritsa River near Dimitrovgrad.

This was one of the biggest technical challenges in the project, primarily due to the complex geology under the river bed. The whole process took a total of 28 days, and the final phase - pulling the entire pipeline section - took more than 10 hours of non-stop work. The length of the section is 422 m, and the crossing is done by the method of horizontal directional drilling (HDD).

In August 2021, ICGB AD submitted a request for EUR 8.7 million under OPIC for the EPC works.

Bulgaria and Azerbaijan are in talks for reaching an agreement on gas supplies at the next stage. The agreement for gas supply from Azerbaijan and the documents for its implementation foresees that “Bulgargaz” EAD, a subsidiary of BEH, shall receive supplies at the delivery point Komotini in Greece.

This is the point of interconnection between the Trans-Adriatic Pipeline (TAP) and the Interconnector Greece-Bulgaria (IGB), through which it is envisaged that natural shall reach Bulgaria. The Agreement does not foresee that the Bulgarian side can unilaterally designate or change the delivery point, which means that the temporary change of the delivery point requires the approval of the Azerbaijani supplier.

Due to the ongoing construction of the Interconnector, the delivery point Komotini was not put into commercial operation as of the commencement date for supplies under the Agreement – 31.12.2020., and is expected to enter commercial operation in the middle of 2022. This required the execution of negotiations with the Azerbaijani supplier, which resulted in achieving an agreement for a temporary use of another delivery point on the territory of Greece and transportation of natural gas to Bulgaria through an alternative route for the period from 31.12.2020 to 30.09.2021.

IGB crossed Studen Kladenets dam in Bulgaria, marking the most critical and challenging construction milestone in September. With a total length of 1 440 m and a 32-inch diameter, this horizontal directional drilling (HDD) is now in the top five longest gas pipeline installations of this diameter executed in the EU. To date, the ranking is headed by the crossing of Axios River for the TAP project in Greece.

First hydrotests on the Greek part of the Interconnector Greece-Bulgaria started in October 2021.

The project company for construction of the Interconnector Greece-Bulgaria started the testing of infrastructure along the pipeline’s route in October.

In October, the European Commission (EC) formally approved without comments the second interim payment of 16,503,254.24 euros for the Interconnector Greece-Bulgaria. ICGB also received approval for the second interim payment under the European Energy Program for Recovery (EEPR) following the completion of another detailed audit.

In November, the ICGB AD received a license for natural gas transmission for 35 years for the territory of Bulgaria, a similar permit for the territory of Greece is expected to be approved for a period of 50 years.

AVAX confirmed that they would complete the construction within the agreed timeline. A letter was sent by the Bulgarian Ministry of Energy, informing AVAX that in case of delays under the agreed terms, a penalty in the agreed amount would be imposed. An identical letter was sent by the Executive Directors of the project company ICGB in September 2021.

ICGB AD noted that the period for entering commercial exploitation for the IGB pipeline has been approved by the national energy regulators of Greece and Bulgaria – EWRC and RAE – and is set for July 2022. ICGB is hopeful that all involved parties will fulfil their contractual obligations in a timely manner so that this deadline can be met accordingly.

Welding for the Interconnector Greece-Bulgaria is close to finishing, the ICGB AD, a project company.

Construction activities for the IGB pipeline continue with a stable pace during the month of November. Right of way and stringing activities are now completed. Welding activities are also close to finishing with nearly 96 percent completion rate achieved. Automatic welding is completed, just under 7 km are left to be welded with manual and hybrid welds.

The ICGB AD said that over 173 km of pipe with field joint coating are ready and a total of 162 km are lowered.

Trenching along the entire route will be completed by the end of the month. The majority of the crossings for the IGB pipeline are now completed – road crossings, railways and other existing infrastructure along the 182-km route of the interconnector.

The ICGB AD, the project company for construction of the Interconnector Greece-Bulgaria managed to successfully complete all 4 social and environmental audits under the strict European Investment Bank procedures, and the 5th audit is planned for Q1 of 2022.

ICGB is also moving forward with all the documentation needed to certify the project company as an independent gas transmission operator. Moreover, the company is in the process of coordination for the Interconnection Agreements with the adjacent TSOs - DESFA, TAP and Bulgartransgaz, with their finalization being forthcoming.

Bulgaria receives only one third of the agreed 1 billion cubic meters of gas per year from Azerbaijan due to the delays in construction of the Interconnector Greece-Bulgaria.

Bulgaria asks Azerbaijan to extend timeframe for gas supplies via alternative route until July 2022. Due to the delay in the construction of the Interconnector Greece-Bulgaria, Bulgargaz addressed the Azerbaijani side with a request for delivery of the agreed gas on the alternative route Siderokastro – Kulata from December 31 last year to the autumn of this year. commissioning of the Greece-Bulgaria interconnector was postponed for next year, Bulgargaz had to request an extension of the agreed agreement until July 1, 2022.

In December 2021, the project company ICGB received the third tranche of the financing from the European Investment Bank.

The amount of EUR 30 million was granted in early December following an inspection by the EIB of the performed activities for the realization of the IGB pipeline.

The last tranche of EUR 19.9 million by the European Investment Bank is expected to be utilized in the second quarter of 2022, and the amount will cover the cost of equipment supplies. The bank provides financing in the amount of EUR 110 million as a loan secured by a state guarantee from Bulgariа.

It is planned to hold two audits after commissioning of the Interconnector Greece-Bulgaria.

Ionian Adriatic Pipeline (IAP)

Ionian Adriatic Pipeline can be connected to the Trans Adriatic Pipeline (TAP) to transport gas to many countries in South-East Europe.

The pipeline with total length of 516 kilometers will stretch from Albania through Montenegro, and Bosnia and Herzegovina, to split in Croatia.

The capacity of the pipeline will amount to five billion cubic meters of gas per year.

TAP has already signed memorandums of understanding and cooperation with the developers of this project, in particular with companies of Plinacro (Croatia), BH-Gas (Bosnia and Herzegovina), Geoplin Plinovodi (Slovenia), as well as with the governments of Montenegro and Albania.

There has been created a TAP-IAP joint working group that gathers regularly to synchronize the timing of both pipeline projects and coordinate the technical issues of interconnection. In particular, Croatia expects to receive approximately 2.5 billion cubic meters of gas per year through the IAP.

Project status

Possible time of implementation of the project hasn’t been announced yet.

A Memorandum of Understanding (MoU) on the Ionian Adriatic Pipeline (IAP) was signed in August 2016 by Albania, Bosnia and Herzegovina, Croatia, Montenegro and SOCAR.

In September 2016 it was announced that SOCAR will be a technical consultant in IAP project.

Western Balkans Investment Framework (WBIF) allocated 2.5 million euros worth grant for IAP in February 2017.

Implementation of Terms of Reference for the Ionian-Adriatic Pipeline (IAP) project started. The Terms of Reference have been agreed upon among stakeholders in April 2018, and the implementation started in May 2018.

The final report on the environmental impact study of the Ionian Adriatic Pipeline project is expected to be received soon. The comments received during the public debate are processed by the author of the study. However, the situation with the COVID-19 has negatively affected the implementation of these activities. All the activities for the Ionian Adriatic Pipeline project have been postponed due to the COVID-19 pandemic.

The European Commission recognises the importance of the Ionian-Adriatic Pipeline for the regional gas market, in particular Croatia, Albania, Montenegro and Bosnia and Herzegovina.

As a signal of its relevance for the region, the Commission has awarded IAP the status of Project of Mutual Interest (PMI), category of infrastructure projects that includes those that benefit one or more Contracting Parties(Western Balkan countries, Ukraine, Moldova, Georgia) and one or more Member States but do not have a Project of common interest (PCl) status in the European Union, in line with the Regulation (EU) 347/2013.

Given its PMI status, Commission’s funding under specific programs, such as the Instrument for Pre-accession Assistance (IPA), could be explored for the support of the construction of IAP in the Western Balkan countries.

Ighdir-Nakhchivan gas pipeline

Azerbaijan and Turkey signed a memorandum of understanding on Ighdir-Nakhchivan gas pipeline on Dec.15, 2020.

The project will be implemented by Azerbaijan’s state oil company SOCAR and Turkey’s BOTAS. Nakhchivan currently receives gas mainly through Iran. The supply of Azerbaijani gas through Turkey will help Nakhchivan meet its gas demand. The Turkish section of the pipeline from Ighdir to Sadarak, Nakhcivan, will be 85 kilometers long.

Project status

The Igdir-Nakhchivan gas pipeline project is scheduled to be completed within a year.

The pipeline’s capacity will 500 million cubic meters per year.

Engineering works were completed in October 2020.

In January 2021, Turkish President Recep Tayyip Erdogan made a decision to build communication lines and carry out other work as part of the Igdir-Nakhchivan gas pipeline project.

In accordance with the decision, the Turkish Petroleum Corporation (TPAO) was entrusted with carrying out this work.

Preparations for the Igdir-Nakhchivan gas pipeline between Turkey and Azerbaijan were completed in June.

The construction of the Turkish-Azerbaijani Igdir-Nakhchivan gas pipeline will be completed in 2022.

In 2020, 86 million Turkish liras ($10.29 million) were spent on preparatory work for the construction of the gas pipeline. As of 2021, 68.8 million Turkish liras ($8.23 million) is expected to be spent on the construction of the gas pipeline.

Trans-Caspian Gas Pipeline

Turkmenistan is studying the possibility of delivering its energy resources to the European market. To this end, it promotes the project for construction of the Trans-Caspian Gas Pipeline to the coast of Azerbaijan, from where the Turkmen gas can be delivered to Turkey and further to Europe.

The Trans-Caspian Gas Pipeline project may be implemented as part of the Southern Gas Corridor.

Recently, Turkmenistan, Azerbaijan, Turkey, Georgia and EU have intensified the talks on the implementation of the Trans-Caspian Gas Pipeline project.

Project status

Currently, there are no direct agreements on the implementation of the Trans-Caspian Gas Pipeline project. The talks on this project have been going on since 2011 between the major interested parties: EU, Azerbaijan and Turkmenistan.

Turkmenistan has expressed its readiness to supply 40 billion cubic meters annually to Europe, 10 billion cubic meters of which can be provided by the Petronas company, which operates in the Turkmen sector of the Caspian Sea. The remaining volume can be provided by the 800-km East-West pipeline, which originates from the Galkynysh field and finishes off the coast of the Caspian Sea.

In April 2015, a declaration on development of energy cooperation was signed in Ashgabat following the multilateral talks on the Trans-Caspian Gas Pipeline project between Turkmenistan, Azerbaijan, Turkey and the EU.

Moreover, in order to consider the complex of organizational, legal, commercial, technical and other issues related to gas supply from Turkmenistan to Europe, the parties agreed to create a working group at the level of deputy ministers in charge of energy issues of Turkmenistan, Azerbaijan, Turkey and the EU.

Islamic Development Bank is ready to study the possibility of supporting the Trans-Caspian Gas Pipeline project.

In June 2018, Georgia and the European Commission agreed to jointly finance the commercial engineering of the project.

The European Commission is conducting technical discussions with Turkmenistan to find out how and under what conditions Turkmen gas can be supplied to the EU, and also maintains close ties with Azerbaijan on this issue.

However, any possible version of the Trans-Caspian pipeline project should be built and financed by private companies.

Recently, the European Commission proposed that Turkmenistan develop a feasibility study for Turkmen gas supplies. The EU companies need the necessary guarantees from Turkmenistan for serious participation in this project.

Azerbaijan-Georgia-Romania Interconnector (AGRI)

AGRI project envisages transportation of Azerbaijani gas to the Black Sea coast of Georgia via gas pipelines. Azerbaijani gas delivered to Georgia's Black Sea coast will be liquefied at a special terminal and following this, it will be delivered in tankers to a terminal at the Romanian port of Constanta.

Further, it will be brought to the gaseous state and sent via Romanian gas infrastructure for meeting the demands of Romania and other European countries.

The project’s cost is estimated at 1.2-4.5 billion euros depending on the terminals’ capacity, which can vary between 2 and 8 billion cubic meters of gas per year.

The participants of the AGRI project are SOCAR, Georgia's Oil and Gas Corporation, as well as MVM (Hungary) and Romgaz (Romania). The parties established the SC AGRI LNG Project Company SRL with the purpose of developing the Feasibility Study.

Project status

Azerbaijan, Georgia and Romania signed on June 24, 2015 a joint declaration on supporting the development of the Azerbaijan-Georgia-Romania Interconnector project.

British Penspen engineering company presented to shareholders of AGRI the final version of the feasibility study (FS) of the project in late 2015.

Turkmenistan is highly interested in the Azerbaijan-Georgia-Romania Interconnector project. To supply this project with Turkmen gas, it is necessary to build a separate gas pipeline along the Caspian seabed to the coast of Azerbaijan or to deliver liquefied gas through the sea via tankers.

It is expected that the AGRI gas pipelines system project (Azerbaijan-Georgia-Romania Interconnector), which provides for the transportation of Azerbaijani gas to Europe, will be implemented after 2024-2026.

Presently, the shareholders of the AGRI LNG project company are discussing issues related to the further development and implementation of the AGRI project, presumably after 2024-2026, when the second stage of development of Azerbaijan’s Shah Deniz field and other fields will be completed.

Azerbaijan-Georgia-Romania Interconnector project is currently frozen.


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