AZERBAIJAN'S GAS FOR ITALY: 8.6 BCM/Y

PLATTS - Azerbaijan's Shah Deniz 2 natural gas field producers have booked around 8.6 Bcm/year of long-term capacity to Italy in the planned 10 Bcm/year Trans-Adriatic Pipeline, developer TAP's head of communication, Lisa Givert, told.

TAP is the last leg of the so-called Southern Gas Corridor that is to enable Europe to import gas initially from the 16 Bcm/year Shah Deniz 2 field, a new supply source.

The EU views the Southern Gas Corridor, which links the expanded South Caucasus Pipeline from Azerbaijan via Georgia to the 31 Bcm/year TANAP pipeline in Turkey, and TAP, as a key element in its efforts to bring new supply sources to southeast Europe, where Russia is the dominant supplier.

The TAP section runs from Greece via Albania to Italy, and is planned online in 2020, when the first Shah Deniz 2 deliveries to the EU are expected.

The Shah Deniz 2 producers have booked the capacity under 25-year ship-or-pay contracts from when the pipeline starts operating, Givert said, without giving specific company breakdowns.

The producers are the UK's BP (28.8%), Azerbaijan's Socar (16.7%), Malaysia's Petronas (15.5%), Russia's Lukoil (10%), Iran's NICO (10%) and Turkey's TPAO (19%).

TAP's shareholders are BP (20%), Socar (20%), Italian gas transmission system operator Snam (20%), Belgian gas TSO Fluxys (19%), Spanish gas TSO Enagas (16%) and Swiss energy company Axpo (5%).

The Shah Deniz 2 producers started commercial gas deliveries to Turkey in July.

TAP could enable new gas supplies to reach several southeast European countries, including Albania, Bulgaria, Montenegro and Croatia, as well as Italy and beyond.

CAPACITY AUCTIONS

TAP plans to offer short-term primary capacity separately at future public auctions, Givert said.

It has not yet decided on the capacity booking platform.

"Secondary capacity [will also be] available to any interested third party in line with the terms and conditions of the network code and the corresponding gas transportation contracts," she said.

TAP is consulting until September 18 on the draft network code for accessing, using and operating the planned pipeline.

This is required by an agreement with the European Commission that exempts TAP from the third-party access, tariff regulation and ownership unbundling rules normally required of pipelines under the EU's third energy package legislation.

RUSSIAN INTEREST

Any interested parties can also take part in TAP's open seasons for assessing demand for extra capacity, as long as they comply with all the requirements, she said.

TAP could double its capacity 20 Bcm/year by adding two compressor stations, if there is demand. It will also be able flow gas in both directions, allowing gas from Italy to go to southeast Europe if needed.

Russia's Gazprom has said it could consider using TAP to transport gas from the second line of its planned 31.5 Bcm/year Turkstream pipeline to Turkey onward to Europe.

Turkstream is planned to come online in 2019, with flows through the first 15.75 Bcm/year line intended for the Turkish market.

The European spur options include potentially two separate 8 Bcm/year links: one via Greece to Italy using a new pipeline -- ITGI Poseidon -- or TAP, and the other via Bulgaria and Serbia to Hungary.

TAP is already more than 76% completed, according to its website, with much of the pipeline in Greece already laid and the Italian offshore section set to begin construction in 2019.

Italian President Sergio Mattarella said Italy was committed to completing the project during a state visit to Baku in July.

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Earlier:

2018, August, 22, 12:45:00 AZERBAIJAN'S GAS FOR GERMANY FT - The German official welcomed an agreement reached earlier this month between the Caspian littoral states — Russia, Iran, Kazakhstan, Azerbaijan and Turkmenistan — on a legal framework for sharing the Caspian, the world’s largest inland body of water.

2016, September, 26, 18:40:00 SOUTHERN GAS CORRIDOR DIFFICULTIES The $45bn complex pipeline project running from Azerbaijan to Italy and consisting of four mega projects – Shah Deniz 2, South Caucasus Pipeline expansion (SCPX), Trans-Anatolian Pipeline (Tanap), and the Trans-Adriatic Pipeline (TAP) – would be delivered and will come in under budget, eventually delivering 16-32bn m³/yr.

2016, September, 16, 18:00:00 IMF BOUGHT AZERBAIJAN Executive Directors welcomed the steps the authorities have taken to adjust to the decline in oil prices and weaker growth in trading partners. However, they noted that the difficult external environment could hamper macroeconomic outcomes in the near term. While Azerbaijan’s policy buffers remain substantial, the balance of payments, fiscal position, and banking system would likely remain under pressure as the economy continues to adjust. Accordingly, Directors stressed the need to press ahead with reforms to secure macroeconomic and financial stability and promote a diversified and private sector-led economy.

2016, June, 22, 18:15:00 WBG BUYS AZERBAIJAN With oil prices forecast to remain low, Azerbaijan’s growth and fiscal position are likely to weaken further in 2016, posing significant risks. Financial sector vulnerabilities and an underdeveloped macroeconomic policy framework are further adding to the country’s challenges.

2016, June, 22, 18:10:00 AZERBAIJAN NEED $30 BLN Azerbaijan is hoping in the best case for profits in excess of $50bn from the Southern Gas Corridor (SGC). State oil company Socar told that even the gloomiest outlook showed that Azerbaijan’s share in the profit of SGC would be at least $30bn over the 25 years' duration of the sales and purchase agreements.

2016, May, 10, 18:00:00 SHAH DENIZ $1.5 BLN BP PLC, on behalf of the Shah Deniz consortium, has let a $1.5-billion contract for the transport and installation of the deeper water subsea production systems for Shah Deniz Stage 2 offshore Azerbaijan to the BOS Shelf LLC, Saipem Contracting Netherlands BV, and Star Gulf FZCO consortium.

2015, December, 17, 19:40:00 TANAP PARADOXES The product of Turkey’s far-sighted, strategic energy partnership with Azerbaijan, TANAP will initially transport 16 bcm annually from the Shah Deniz field’s second phase of development via the expanded South Caucasus Pipeline (SCPX) extending across Azerbaijan and Georgia to the Turkish border.