TANAP project & energy security



There has been much talk about Turkey turning from a mere consumer to a big league player when it comes to natural gas. With the Trans-Anatolian Natural Gas Pipeline (TANAP) carrying gas from Azerbaijan’s Shah Deniz gas fields through Georgia and Turkey to Europe now fully operational, Turkey’s ambition has become veracity. On November 30, Erdogan and Azerbaijan’s President Ilham Aliyev inaugurated a link between the Turkish and Greek gas grids, which marks the completion of the Trans-Anatolian Pipeline (TANAP).

Surely, its supplies to Europe  some 10 billion cubic metres (bcm) annually are a drop in the ocean compared with the volumes the EU receives from Russia (176 bcm in 2018). But for countries like Greece and Bulgaria, both of which import about three bcm of Russian gas a year, this is a significant alternative source. The two countries have contracts for one bcm with the company behind TANAP, Shah Deniz, an international consortium of BP, Azerbaijan’s SOCAR, Turkey’s TPAO, Norway’s STATOIL and others. TANAP comprises the longest stretch of the $40 billion Southern Gas Corridor, a series of pipelines that will carry gas from Azerbaijan’s Shah Deniz II field to Europe.

The $6.5 billion TANAP crosses the breadth of Turkey, east to west, and could transport up to 16 billion cubic meters (bcm) of Azeri gas a year. Europe is allocated 10 bcm, with 6 bcm earmarked for the Turkish market. Capacity could be increased to 31 bcm with additional investment. The pipeline connects to the Trans-Adriatic Pipeline (TAP), which is still under construction and will then transfer up to 10 bcm gas to Greece, Albania and Italy.

TANAP’s shareholders are Azeri state energy company SOCAR (51%), Turkish pipeline operator BOTAS (30%), BP (12%) and SOCAR Turkey (7%). President of Turkey, Recep Tayyip Erdoğan revealed that, the real responsibility from now on lies with our neighbours on the other side of the border. The Trans-Adriatic Pipeline needs to be completed as soon as possible to start the transfer of gas to Europe. TANAP represents a strategic achievement for Turkey. For a long time, it has strived to graduate from a larger consumer to a transit country, capitalising on its position in between oil and gas-producers and major importers in Europe. The arrival of Azeri gas to the Balkans brings that vision to fruition. Azerbaijan itself has been trying to diversify its export destinations.

After independence from the Soviet Union, the country inherited oil and gas infrastructure which was connected to Russia. Ankara’s long standing ambition is for TANAP to be scaled up from 16 to 31 bcm, with gas coming from other destinations such as Turkmenistan, northern Iraq and Iran. If it plays its cards right, Turkey may establish itself as a trading hub and top-notch energy power. Turkey’s pursuit of energy autonomy makes it a welcome partner to both the EU and the US. The Trump administration has put a premium on US LNG sales in Europe, lobbying governments to commit to larger volumes. Turkey has become the second-largest customer for American gas in Europe and Central Asia after Spain.

TANAP is, arguably the greatest opportunity for Azerbaijan to integrate with Energy Market of Europe, as well as to establish itself as a secure transit country. In a long-term instance, the project will drastically increase gas exports of the country from 8.1 bcm to almost 24 bcm annually. On a domestic level, TANAP will provide a great moment to develop resource industries to that of global standards. The Import of natural gas in the EU accounts for 2/3 of the European gas supply, due to decline in gas production in last decade, and the decline is yet to progress. According to the International Energy Agency (IEA), by 2040 European annual production will drop by 100bcm, and in this case, the region will be dependent on huge imports, to reduce the gap between demand and declining supply within EU.

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