Montenegro eyes EUR 30mn annually from future gas pipeline linked to Azerbaijan’s Shah Deniz

By bne IntelliNews July 3, 2013

Montenegro estimates it could earn up to EUR 30mn annually in transit fees from a future regional gas pipeline that will be linked to the Trans Adriatic Pipeline (TAP) – the route, which was selected to bring natural gas from Azerbaijan’s Shah Deniz to Europe, state broadcaster RTCG reported, quoting an economy ministry official.

TAP is designed to transport gas from Azerbaijan via Greece and Albania and across the Adriatic Sea to Italy and Western Europe. Last month, the Shah Deniz consortium, which develops the largest natural gas field in Azerbaijan, selected TAP as a preferred route instead of Nabucco West for transporting the gas deliveries.

Vladan Dubljevic, deputy economy minister in Montenegro, said that in order to connect it with the rest of Southeast Europe, one leg of TAP will stretch from Albania through Montenegro and Bosnia to Croatia.

“Now we already know we will be part of this project, which will certainly be implemented,” Dubljevic told RTCG on July 2. The final signing of the deal, connected with the planned investment, is expected at the end of the year.

The total length of the leg will be 516 km as 60-70 km will pass through Montenegro. The construction of the Montenegrin section will cost EUR 70-80mn and most likely some 70-80% of the funding will be provided by European funds since the EU has already welcomed the pipeline project as it is an alternative to the Russian gas routes.

For the remaining 30-20%, or EUR 15-20mn, Podgorica will have to find an investor but Dubljevic expect the interest will be significant considering the annual revenue of some EUR 20-30mn. The state interest is that the transport activities remain in its hands – it is therefore expected that state-controlled Montenegro Bonus will be in charge of the gas transfer.

At present, there are two options for the route through the country – the first one is under the Skadar Lake, along the Adriatic coast and under the sea to Croatia, while the second one enters inland to Podgorica and Cetinje and then again goes under the sea to Croatia.  

The economy ministry certainly prefers the second option even though it is 10km longer as it will serve better to the existing and future industrial businesses and could provide cheap to major companies like KAP’s alumina plant and steel mill Zeljezara Niksic.

Furthermore, the pipeline will boost other activities linked to creating local gas distributors, building gas networks and gasification of towns. The planned gas consumption in the country is seen at 600 million cubic metres annually.

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