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Gas Starts Flowing From Azerbaijan To Europe

By Mushvig Mehdiyev January 2, 2020

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TAP AG specialist shows a thumb up after the successful launch of gas flow from Azerbaijan to Europe, December 31, 2020 / TAP AG

The Southern Gas Corridor (SGC) mega energy project came to fruition as it began supplying the first batch of commercial gas from Azerbaijan to destination markets in Europe on Thursday.

The country's energy ministry announced that the Trans Adriatic Pipeline, the final segment of SGC, started its long-anticipated mission to pump Caspian gas to the markets in Southern Europe.

"The transportation of natural gas extracted from the Shah Deniz field, the main source of the Southern Gas Corridor, to the Turkish market from June 30, 2018; to the European market for the first time, opens a new page in the development of Azerbaijan as a gas country," reads a statement released on the ministry's website.

"The transport of natural gas to Europe will strengthen the energy security of our country by diversifying the supply markets and of consumer countries by diversifying the sources and routes. It will contribute to development and stability in the great geography," it added.

Gas flow from Azerbaijan to Europe via the Trans Adriatic Pipeline (TAP) follows the commercial launch of the pipeline after four and a half years of construction on November 15. TAP starts at the Turkish-Greek border, runs along 773-kilometer onshore and 105-kilometer offshore routes traversing Greece and Albania toward its end destination in Italy. The annual transportation volume of the pipeline is more than 10 billion cubic meters of gas (bcm), of which 8 bcm is destined for Italy, 2 bcm for Greece and Bulgaria, and the rest for the markets in the neighborhood.

TAP's operator TAP-AG confirmed on the same day the launch of gas supplies from Azerbaijan. The first batch of gas was received by Greece and Bulgaria, via the Nea Mesimvria interconnection point with DESFA, a natural gas transmission system operator in Greece, as well as by Italy, via the Melendugno interconnection point with SNAM Rete Gas (SRG), an Italian energy infrastructure company.

“Today is a historic day for our project, as well as for our host countries and Europe’s energy landscape. TAP is an essential part of the continent’s gas network, contributing to the energy transition roadmap," said Luca Schieppati, TAP’s Managing Director. "We offer a reliable, direct, and cost-effective transportation route to southeast European countries and beyond.”

TAP's Commercial Director Marija Savova said preparations are underway to provide transportation services to shippers in the upcoming months and years, while at the same time working to launch the second phase of the market test in the summer, which could potentially double TAP's capacity to 20 bcm of natural gas per annum.

Meanwhile, in November, DESFA and TAP held the first natural gas auction for the distribution of uninterrupted natural gas transmission capacity at the new interconnection point of Greece's National Natural Gas System (NNGS) in Nea Mesimvria, a village near the Greek city of Thessaloniki on the Aegean Sea coasts. The online auction covered the first, second, and third quarters of 2021 and was completed successfully with 99,96 percent of the marketed capacity to have been allocated to users.

The three-segmented Southern Gas Corridor traverses seven countries and six regulatory systems, links 11 different investors, and will initially supply 12 different gas buyers, including primarily in Europe. The pipeline's 16 bcm annual transportation volume is shared between Turkey and Europe, which get 6 bcm and 10 bcm respectively.

The 3,500 kilometer-long Southern Gas Corridor contributes to strengthening the European energy security, diversifying the European energy supplies, and boosting decarbonization efforts of Europe by an uninterrupted flow of Azerbaijani gas. The $33 billion project, defined as one of the world's most complex and expensive pipelines built to date, is second to none kind in terms of pumping the Caspian gas directly to the European marketplace.

"In addition to providing a steady revenue stream, the Southern Gas Corridor project aims to strengthen the country’s [Azerbaijan's] ties with its neighbors and Europe. Baku hopes that the project will generate stronger European interest in preserving peace and security in the South Caucasus, due to Azerbaijan’s new role as a major energy supplier," explains Vitaly Baylarbayov, Deputy Vice-President for Investments and Marketing of SOCAR, the state oil company of Azerbaijan.

The SOCAR official said he believes that Azerbaijan will remain a reliable energy partner to Europe, given the decline in the domestic production in Europe, as well as the attempts of some European states, including those in the Western Balkans, to phase out coal consumption, which will kick the demand for natural gas high in many European markets.