Page 7 - FSUOGM Week 46

FSUOGM COMMENTARY FSUOGM

Diversifying supply The tender is currently scheduled for June 2021.
“Today, a long-term vision has become a reality!” “For the Southern Gas Corridor project and
TAP managing director Luca Schieppati said in its many stakeholders, TAP’s launch is the end
a statement announcing the pipeline’s comple- of the beginning, not the end itself,” Wood Mac-
tion. “I am extremely proud of this achievement, kenzie’s Douglas said. “A scenario without TAP
made possible first and foremost thanks to the expansion to 20 bcm per year would be a failure
dedication and commitment of our people and against the initial objectives, especially for Euro-
everyone involved, the solid trust and unwa- pean supply security.”
vering support of our shareholders, all govern- “All eyes will be on the binding phase of TAP’s
ments in the value chain and the EU, as well as market test in summer 2021,” he continued.
the suppliers and contractors that worked on the “This could be a bellwether for the post-lock-
project.” down recovery of European gas fundamentals.”
The project provides a “new, reliable and sus- The expansion would require extra gas
tainable energy route and source of gas reaching supply to be developed at the Shah Deniz field
millions of European end-users for decades to and other BP-operated deposits in Azerbaijan.
come,” he said. Some could also come from the Absheron pro-
Italy, one of the largest gas markets in Europe, ject being exploited by France’s Total. Besides
currently relies on a mix of piped gas from Alge- extra customers in Italy, Greece and Bulgaria,
ria, Libya and Russia, along with LNG. some of this gas could go to other Russia-reli-
“TAP’s commissioning enhances Italy’s ant markets such as Serbia, Bosnia and North
supply options as it forges ahead with plans to Macedonia.
decarbonise,” Wood Mackenzie research direc- SOCAR also previously expressed interest
tor Murray Douglas said in a research note. “It in creating new markets for gas in Albania and
represents the first major pipeline project not Montenegro – countries that currently lack gas
underpinned by contracts with Eni. It will also grids – through investment in large-scale gasifi-
improve the liquidity of Italy’s PSV gas hub and cation work. These projects have not made much
open more opportunities for south-to-north progress, however.
flows in the country.” The pandemic has dented gas demand this
Greece, meanwhile, mainly takes Russian gas year and left countries struggling to finance new
but is looking to expand its LNG imports, with infrastructure developments, however, weigh-
plans for a new LNG regasification terminal in ing down on prospects for TAP’s expansion. The
Alexandroupolis. It wants to use this project and EU is also unlikely to provide anywhere near as
TAP to establish itself as a hub for regional gas much support for the project, given Brussels’
supplies. growing antipathy towards fossil fuels.
Bulgaria relies on Russia for virtually all of its “Despite the European Green Deal and cur-
gas needs, but will be able to access both TAP’s rent market uncertainty, we are positive on the
gas and LNG arriving in Greece once the 3 bcm outlook for the TAP expansion,” Douglas said.
per year Interconnection Greece-Bulgaria is “However, regional gas dynamics have shifted
completed. since TAP construction started in 2015, espe-
cially thanks to Turkey’s recent giant Black Sea
Future prospects discovery. More Azeri gas had been the initial
TAP’s investors want to expand the pipeline to hope to fill the TAP expansion, but this is look-
handle 20 bcm per year at a later stage, but have ing increasingly unlikely because of challenging
delayed the binding bidding phase for this extra project economics and better-positioned supply
capacity in light of current market conditions. alternatives, including Russian gas.” ™

Week 46 18•November•2020 www. NEWSBASE .com P7