BAKU, Azerbaijan, February 29. The Trans Adriatic Pipeline (TAP) aspires to be an important contributor to the objectives of the European Green Deal and the Paris Agreement by potentially supplying the EU with low carbon/renewable gases in the future, Luca Schieppati, TAP managing director, said in an exclusive interview with Trend ahead of the Southern Gas Corridor Advisory Council’s meeting to be held in Baku March 1.
“TAP is focused on enhancing Europe’s energy security and diversification of energy routes, as well as ensuring just transition happens in a sustainable manner, particularly in South-East Europe and the Western Balkans, a region overly reliant on heavy fossil fuels. Achieving these objectives is a complex endeavour, which requires continuous dialogue and collaboration among trusted and reliable partners, offering various solutions during the ongoing 2023 Market Test procedure. Hence, along with other senior executives of TAP, I will travel to Baku to attend this important gathering. This meeting provides a great opportunity to discuss the progress of the Southern Gas Corridor and the future expansion plans for our strategic energy value chain, of which TAP represents the European section, transporting energy to the relevant markets,” said the managing director.
Luca Schieppati went on to add that in 2023, the Green Energy Advisory Council Ministerial meeting was held for the first time, allowing us to exchange views on SGC’s green agenda.
“At TAP, we aspire to be an important contributor to the objectives of the European Green Deal and the Paris Agreement by potentially supplying the EU with low carbon/renewable gases in the future and pursuing new energy strategies. Among other things, we aspire to achieve carbon neutrality through the expansion projects with electrification of our compressor stations and other mitigating measures. Therefore, for the second consecutive year, the Green Energy Advisory Council will provide a great platform to discuss these matters,” he noted.
Hydrogen transportation
Schieppati pointed out that the entire industry is currently focused on hydrogen as one of the key solutions to support the energy transition and eventually achieve carbon neutrality by 2050.
“TAP has been quick to embrace this notion from the outset. Our ambition is to develop the asset to allow transportation of hydrogen, initially in the form of a blend with natural gas. We are in the process of assessing the degree to which TAP can technically accommodate transporting a blend of natural gas and hydrogen. In 2021, an Initial Hydrogen Readiness study confirmed that TAP has the potential to transport hydrogen blend. We already started testing our asset materials and we expect the initial results for the offshore pipeline to be available towards Q2 2024. Depending on the results from these initial tests, TAP may continue with tendering wider studies,” he said.
The managing director noted that the timeline for actual transportation of hydrogen blend will depend on the confirmation of the pipeline material suitability, the completion of the wider studies, and most importantly, the availability of hydrogen and whether there is interest from the market.
“In the long run, we envisage hydrogen concentrations being increased in incremental steps in line with the development of the hydrogen market and relevant demand, as well as the evolving regulatory framework both at EU and member states’ levels,” said Schieppati.
Market tests
He noted that the strategic importance of the SGC and TAP has been recognized in the REPowerEU plan which calls for the intensification of cooperation with Azerbaijan and the scaling up of TAP’s capacity to increase the gas supply to the EU and the Western Balkans.
“In July 2022, the EU signed an MoU on a Strategic Partnership in the Field of Energy with Azerbaijan, with a view to double the capacity of the SGC to deliver at least 20 bcm/a of gas to the EU by 2027. The current nominal transportation capacity of the pipeline is 10 billion cubic meters per year (bcm/a) with the potential to be doubled to in excess of 20 bcm/a. TAP’s expansion capacity is offered to the market through regular Market Tests in an open, transparent, and non-discriminatory way. Market Tests are held at least every odd year. The Market Tests are structured in two phases, the non-Binding and the Binding phases,” added Schieppati.
The managing director recalled that the 2021 Market Test was completed earlier this year and it resulted in binding commitments, which will add another 1.2 bcm/a to the pipeline capacity by 1 January 2026. “This first step of expansion reinforces the SGC’s significance for the EU’s security of energy supply and paves the way for further expansions, which can be achieved in steps through participation in the next Market Tests. In line with the regulation, the non-Binding phase of the new 2023 Market Test was launched in July 2023 and it is still ongoing. We expect its Binding phase to take place towards the end of 2024. As a proactive regulated operator, TAP’s new draft Project Proposal will offer the market an updated full suite of capacity levels, covering the full range up to 20 bcm/a. The aggregated results of the non-Binding phase of the 2023 Market Test will be published in the Demand Assessment Report in due course, in coordination with the adjacent TSOs, confirming the possibility of the Market Test to proceed upon the market interest for new incremental long term capacity,” he said.
Expansion process
The managing director noted that TAP is proceeding with the relevant works required for making the 1.2 additional bcm/a of incremental capacity available to the market, in line with the commitments received.
“TAP will add one compressor unit (ca 15MW) to the existing compressor station in Kipoi (Alexandroupolis area), at the Greek border with Türkiye and upgrade the facilities there. Following the completion of the early civil works, we started the first activities of setting up the temporary construction facilities and the excavation of the foundations for the new compressor building in Kipoi. We will also begin the excavation works associated with the new Electrical Control Building. The final preparation activities for the main piping tie-ins are nearing completion, which will allow us to start this work on site in the coming months. In addition, the procurement of the main materials and engineering continues to meet the overall project schedule – and we expect the Commercial Operation Date to be on 31 December 2025,” he added.
Schieppati recalled that TAP’s initial capacity of 10 bcm/a has been allocated to shippers and booked for 25 years, in line with the long-term gas transportation contracts signed back in 2013.
“As you may know, TAP offers to the market capacity for short-term bookings through the PRISMA capacity booking platform. The level of these short-term bookings depends on the market needs. However, since February 2022, due to the ongoing crisis, we have been invited to address Europe’s natural gas shortages and we have tackled this challenge successfully. Since then, we have been close to full utilization, with significant short-term bookings, on top of long-term commitments and the number of our shippers has increased significantly. We have been leveraging the operating conditions of the pipeline to maximize the volumes transported and we developed commercial products increasing the use of short-term capacity on top of long-term commitments and short-term regulatory obligations,” he said.
The managing director noted that since the start of operations on the last day of 2020, TAP has transported over 32 bcm to date.
“In 2023 alone, we transported 11.5 bcm, the highest annual volume transported since we started our operations. TAP has proven itself as a resilient and reliable strategic energy infrastructure during the last three years of its operation and we are committed to continue supporting Europe in 2024 and beyond,” he said.
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