TANAP: prospects for Azerbaijan

Azerbaijan and Turkey signed an intergovernmental agreement on the Trans-Anatolian gas pipeline (TANAP) in Istanbul. The importance of this event for Azerbaijan is in a number of opening prospects.

First, another very heavy stone has been laid in the foundation of the Southern Gas Corridor, so much-anticipated and important for Europe and for Azerbaijan and Turkey, from the standpoint of ensuring energy security of the EU.

Second, unlike the Turkish pipeline system where it would be necessary to coordinate pumping schedules with the transportation of a gas of another origin, it will be its own pipe for pumping Azerbaijani gas and at least in the initial stage from the Shah Deniz field.

Given the share of the State Oil Company of Azerbaijan (SOCAR) in the Baku-Tbilisi-Erzurum gas pipeline (BTE) Azerbaijan will be able to control about two-thirds of the entire transport route to Europe. However I would like to raise a reminder about the future plans of the State Oil Company voiced last summer whereby according to which, it intends to buy a stake in the project which in 2013 will be selected by the Shah Deniz consortium to transport gas from the western border of Turkey to Europe.

The consortium is currently considering three competing projects - TAP (Trans Adriatic Pipeline), Nabucco West and SEEP (South East Europe Pipeline). If these intentions are put into practice, SOCAR will have equity participation through the entire transport chain, from the Caspian coast to European buyers. This will mean the opportunity to participate in the regulation of pricing of natural gas exports to Europe and sell it at the best prices for Azerbaijan.

Third, in a broader sense, this would also mean an increase in the role and status of Azerbaijan as a partner, ensuring part of the European continent with such a necessary source of energy which today is natural gas, to which Europe attaches particular importance during the transition to the massive use of renewable energy sources.

It is from these positions that signing of an intergovernmental agreement on the TANAP can safely apply importance for the country on a par with events such as the signing of agreements on the BTE gas pipeline and the Baku-Tbilisi-Ceyhan oil pipeline (BTC).

The Trans-Anatolian pipeline is expected to be laid across Turkey from the eastern borders to the west, to the border with Europe. The length is about 2000 kilometres. BOTAS has a 20 per cent stake in TANAP, while SOCAR holds 80 per cent in the project. The initial capacity of the pipeline will be 16 billion cubic meters. Some six billion cubic meters of the volume will be supplied to Turkey, while the rest will be transported to Europe. The project cost is about $7 billion.


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