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Turning on TAP: Trans Adriatic Pipeline completes Europe’s Southern Gas Corridor

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17 November 2020

Turning on TAP: Trans Adriatic Pipeline completes Europe’s Southern Gas Corridor

Report summary

On 15 November 2020, the Trans Adriatic Pipeline (TAP) began commercial operations. TAP – the final section of Europe's US$40 billion Southern Gas Corridor from Azerbaijan – will ultimately deliver 10 bcm per year from BP’s Shah Deniz Phase Two megaproject in the Caspian Sea. Commissioning of TAP’s initial capacity follows four and a half years of construction, EUR 4.5 billion of capex and a variety of obstacles – especially in Italy, where the pipeline ends. This is a long-awaited milestone for all stakeholders – investors, upstream source of supply, host governments and offtakers alike. TAP has launched in a turbulent European market environment. But it is a long-term project with expansion plans and wide-ranging significance. We address what its commissioning means from all the key angles.

Table of contents

  • Executive summary
    • Ownership structure is well-aligned for reliable operations
    • A successful construction phase, but it wasn’t all plain sailing
    • A commercially attractive infrastructure investment
    • TAP extends Azerbaijan’s gas export reach beyond Turkey
    • But upstream value, at least initially, is driven by condensate sales
    • Re-escalation of Azerbaijan-Armenia conflict is a background risk
    • Piped gas is essential to meet Italian demand
    • TAP carves out a distinctive path, with a diverse group of offtakers
    • For Italy, a milestone for the PSV hub and south-to-north flows
    • For Bulgaria and Greece, a major shift for concentrated gas markets
    • TAP expansion outlook will be confirmed in 2021
    • Russian gas may supply expansion, with no option a perfect strategic and economic fit
    • TAP expansion should be attractive, including for its initial shipper

Tables and charts

This report includes 7 images and tables including:

  • TAP overview
  • TAP: key figures
  • Netbacks on Shah Deniz gas sales to Italy
  • Italy gas supply-demand balance
  • GSAs for TAP gas
  • ACQ of key gas importers into Italy
  • Southern Gas Corridor capacity expansion plans

What's included

This report contains:

  • Document

    Turning on TAP: Trans Adriatic Pipeline completes Europe’s Southern Gas Corridor

    PDF 1.59 MB