Wires

Azeri gas for Europe from Shah Deniz II delayed to Oct 2020-TANAP head

Nailia Bagirova

BAKU, Nov 1 (Reuters) - Gas from Azerbaijan's giant Shah Deniz field is not expected to reach Europe before October 2020 due to delays in finishing the TAP pipeline in Italy, the head of the Trans-Anatolian Natural Gas Pipeline (TANAP) consortium told Reuters.

TANAP, a 1,850 km pipeline through Turkey, is a part of the Southern Gas Corridor, carrying gas from Azerbaijan's Shah Deniz II field. It also includes the South Caucasus Pipeline (SCP) extension through Georgia and the Trans-Adriatic Pipeline (TAP) to Greece, Albania and Italy.

The Shah Deniz I field has been pumping gas since 2006, selling it to neighboring Georgia and Turkey, while output from Shah Deniz II is expected to reach 16 billion cubic meters (bcm) of natural gas per year by 2021, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

"Commercial deliveries of Azeri gas to Europe can begin no earlier than Oct 2020, since the construction work on the TAP pipeline can be completed by this date," Saltuk Duzyol told Reuters in an interview.

Developing the $40 billion Southern Gas Corridor is a major step in European Union efforts to secure gas supplies and reduce its dependence on existing sources such as Russia and Norway.

Parts of the corridor in Georgia and Turkey are completed and the first commercial deliveries of gas from Shah Deniz II to Turkey began in July 2018, although the TAP project, which includes Britain's BP, Italy's Snam and Spain's Enagas, has faced delays to construction due to environmental issues.

Completion was expected by early 2020, although Duzyol said the TAP consortium faced "some technical difficulties as well as other non-technical issues that affected their success."

Duzyol said that if the pipeline system was not operational by July 1 next year, the TANAP consortium had the right to invoice Azerbaijan Gas Supply Company (AGSC), which handles gas sales from Shah Deniz.

AGSC was established by Azeri state energy firm SOCAR and its partners in the Shah Deniz project.

"It is not TANAP, but the other parties that have not yet reached project completion," he said. "Commercially, according to our gas transportation agreements, we are entitled to issue invoices starting from July 1 next year."

Under the Shah Deniz II gas sales deal, AGSC has to pay fines to gas buyers if they do not get supplies by July 1, 2020.

Duzyol said gas volumes had been supplied to Turkey gradually, starting with 1.9 bcm a year, rising to 5.7 bcm by June 2021. He also said capacity could be boosted to 31 bcm by adding compressor stations along pipeline.

He added that 2.7 bcm was delivered to Turkey from June 2018 until Sept. 30 this year.

Duzyol said TANAP shareholders were expected to get $1.45 billion in annual income over 15 years.

TANAP's shareholders are Azeri state energy company SOCAR (51%), Turkish firm Botas (30%), BP (12%) and SOCAR Turkey (7%). (Writing by Margarita Antidze; editing by David Evans)

Related Tags