Caspian Energy Journal Caspian European Club
Tuesday, 18 June 2019 14:29

Caspian gas delivered to EU Featured

Caspian gas delivered to EU

After the launch of Baku-Tbilisi-Ceyhan in July 2006 and oil export to the world markets, Shah Deniz field gas reached the European border via the Trans-Anatolian gas pipeline (TANAP) on June 15, State Oil Company of Azerbaijan (SOCAR) reported this on facebook on June 16.

The ceremony of launching TANAP gas pipeline’s section towards Turkey took place on June 12, 2018.

The total length of the Trans-Anatolian gas pipeline makes 1850km. It crosses Georgia. The carrying capacity of TANAP shall make at least 16 bcm, of which 10 bcm will flow to Europe and 6 bcm to western regions of Turkey.

The total length of TANAP makes 1850km. The pipeline construction is running in the Turkish province Edirne (areas bordering with Greece) where it will be linked to the Trans Adriatic gas pipeline (TAP). The initial carrying capacity of TANAP pipeline is expected to reach 16 bcm per year. Of this total, 6 bcm of Azerbaijani gas will flow to Turkey, while another 10 bcm will go further to Europe.

Initially, the Turkish company BOTAS will be able to buy 2bcm per year. This indicator will be increased by 2 bcm per year and reach 6 bcm in 2021. A 870km long Trans Anatolian pipeline (TAP) will start in Komotini (Greece) and head towards Apulia in Italy via Albania. It will be used for transporting Shah Deniz II gas supplied from the Caspian Sea.

Thus, in April 2019 the council of the EU states approved amendments to the EU’s gas directive, which concern the operation of offshore gas pipelines. The council’s approval is the final stage of the official negotiation over the document. Early in April it was approved by the European parliament: 465 deputies voted for the amendments, 95 voted against.

According to the directive, the EU states will get 9 months in order to bring their national legislations to compliance with the new rules.

Now the rules which are already applied on onshore pipelines will also cover new and operating offshore gas pipelines laid to the EU from the third countries.

In particular, it relates to unbundling, that is to say, the situation when a producing company shall not own a pipeline supplying its gas.

The EU’s rules also imply the access of the third parties, non-discriminatory tariffs and transparency. However, the amendments provide possibilities of making exceptions for operating and new gas pipelines, which the SGC likely will enjoy. Otherwise, TAP AG which has over 50% in JV which owns TAP will have to diversify owners and sell a part of shares to the third party.

Gas demand in EU grew by over 2% in 2018 while it totaled about 1% in the previous three years. According to BP’s World Energy Outlook, 2019 exploring the forces shaping the global energy transition out to 2040, the world demand for natural gas will steadily grow. Power industry, construction, transport, petrochemistry and other branches of industry shall be the drivers of this growth.

The highest rates of gas consumption in coming 20 years are expected in China, India and other Asian countries.

The contract for the development of Shah Deniz field was signed in Baku on 4 June 1996 and ratified by Milli Majlis on October 17 of the same year.

Parties to the Shah Deniz project are BP (operator, 28.8%), Petronas (15.5%), SOCAR (16.7%), LUKoil (10%), NICO (10%), TPAO (19%).

Gas production on the field is carried out by Alfa platform within the frame of Phase-1 and by Bravo platform within the frame of Phase-2.

According to the EMRA (Energy Market Regulating Authority), Turkey imported 46.3 bcm, 55.2bcm, 50.3bcm in 2016, 2017 and 2018 respectively. 50% of this import gas came from Russia followed by Iran accounting for 7%. Other countries from where natural gas is bought are Azerbaijan, Algeria, Qatar whose share makes about 4%.

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