Azerbaijan and Turkey set to sign off on TANAP

By bne IntelliNews June 21, 2012

bne -

The project that more than any other sounded the death knell for the EU-backed Nabucco, the Trans-Anatolian gas pipeline (TANAP), is set to see an Azerbaijan-Turkey inter-governmental agreement signed.

"The work has entered its final stage. The inter-governmental agreement is expected to be signed in Istanbul next week," a senior Turkish official told Reuters. Another official told the newswire that the signing ceremony, to be attended by Prime Minister Tayyip Erdogan and Azeri President Ilham Aliyev, may be held on June 26, but could also be delayed by a few days.

TANAP, which is planned to carry 16bn cubic metres a year (cm/y) of gas from Azerbaijan's Shah Deniz II gasfield to Turkey's European border, cut the ground from under Nabucco. The EU-backed pipeline had planned to do the same, before heading to Austria, but was struggling to convince the operators of Shah Deniz that it was a viable project. Estimated costs had risen to €12bn-15bn, and the failure to secure the extra gas from Central Asia and the Middle East needed to fill its 31bn cm/y capacity had recently provoked unrest from members of the consortium trying to build the route.

Yet TANAP, which will cost just $5bn-7bn and will be 80% owned by Azeri state firm Socar (a member of the Shah Deniz consortium) and 20% by Turkey's Botas, gets round this problem by limiting its capacity to 16bn cm/y, of which Turkey will take 6bn cm whilst the remainder is shipped to Europe through a connecting project. A scaled down "Nabucco West" and the Trans-Adriatic Pipeline (TAP) are competing for that role, with the Shah Deniz consortium yet to make a decision on its eventual European route.

TAP, being built by a consortium of Statoil, E.On and EGL, will actually require the shortest pipeline to be built - a 520km section with 10bn cm/y capacity that will transport gas via Greece and Albania and across the Adriatic Sea to Italy's southern Puglia region. The cost of the project is approximately $2bn.

TAP was the only project competing to serve the Azeri field that has one of the members of the Shah Deniz consortium in its shareholder structure: Statoil with a 42.5% stake. However, BP, which is the lead operator of the Shah Deniz consortium, has entered the fray by unveiling in September of the South East Europe Pipeline (SEEP), which would run from eastern Turkey to the Baumgarten hub in Austria. "BP's SEEP proposal has gone from dark horse to frontrunner in the past three and a half months since it was first mooted," says Andrew Neff of IHS Global Insight.

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss