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

Insight 17 November 2020

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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.

Executive summary
TAP has been years in the making
- 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 is the final outlet for Shah Deniz gas
- 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
TAP will reshape gas markets in southern Europe
- 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
What next? TAP expansion plans are at top of future agenda
- 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