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Southern Gas Corridor Construction Is Coming Along, Set To Go Online By 2020

By Mushvig Mehdiyev December 19, 2017

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Part-welded pipe sections lie alongside a trench at the 68.5 km point during construction of the Trans Adriatic gas pipeline in Chamilo, Greece. / Bloomberg

Azerbaijan has invested over $8 billion in the Southern Gas Corridor (SGC) mega gas pipeline project, with the largest amount having been allocated to the Trans Anatolian Pipeline (TANAP), the largest, middle segment of the corridor.

The representative from the Southern Gas Corridor Closed Joint Stock Company (CJSC), a state-run company in Azerbaijan that manages and finances the government’s interests in the project, told Caspian News that it has invested $8.4 billion into the project. The Shah Deniz 2 and corridor are expected to have $40 billion worth of investment overall.

“As of December 12 of this year, the CJSC invested $8.4 billion out of the $11.7 billion total amount to be placed in separate Southern Gas Corridor projects during the 2014-2020 period,” Rashad Mustafayev, Deputy General Director at the CJSC, told Caspian News.

A report issued by the CJSC notes an $800 million increase in investments over the past two months.

“Some $2.3 billion has been invested in financing the shares of the SGC CJSC in the Southern Gas Corridor projects from the start of this year to December 14. SGC CJSC invested more in TANAP pipeline as compared to other pipelines [of the Southern Gas Corridor].”

The corridor, which will stretch over 3,500 kilometers (2,175 miles) and run through seven countries in the South Caucasus and southern Europe, is receiving financial support from more than a dozen major energy companies. The three segments that comprise the corridor – the South Caucasus Pipeline, TANAP and Trans Adriatic Pipeline – together create a robust intercontinental route that ultimately allows Azerbaijan to export gas from the underwater Shah Deniz gas field in the Caspian Sea to European markets, beginning in 2020.

Shah Deniz 2, the second section of Azerbaijan’s field, contains an estimated 1.2 trillion cubic meters (over 60 trillion cubic feet) of natural gas and 240 million tons of gas condensate reserves. The field will pump 16 billion cubic meters of natural gas, dubbed “blue gold,” per year that will travel through the SGC pipeline to the consumers in Europe.

The Shah Deniz gas and condensate field, considered Azerbaijan’s largest, will initially be the only source feeding into the corridor. Eventually, the Caspian region’s Turkmenistan is expected to also export its gas through the pipeline.

Azerbaijan is throwing its financial weight behind two projects within the SGC initiative. The first is expanding the South Caucasus Pipeline, the starting point of the energy corridor; the second is providing financial resources for developing TANAP.

The expansion of the SCP envisages laying a new pipeline across Azerbaijan and building two new compressor stations in Georgia that will provide a three-fold increase in the volume of gas pumped through the pipeline, to over 20 billion cubic meters (706.3 billion cubic feet) per year.

“Work in the South Caucasus Pipeline expansion are 93.2 percent complete. Construction of the Trans Anatolian Pipeline reached 87.4 percent, while works in Trans Adriatic Pipeline have been fulfilled by 60.8 percent,” Mustafayev told Caspian News.

TANAP runs 1,800 kilometers (1,119 miles) across Turkey, from its eastern border with Georgia to its western border with Greece. TANAP’s natural gas deliveries are estimated around six bcm (212 bcf) of gas to Turkey from a total initial capacity of 16 bcm (565 bcf), transported annually through the corridor.

TANAP transitions into TAP in Greece, traverses through Albania and underneath the Adriatic Sea, before emerging in southern Italy and connecting to Europe’s energy grid.