TANAP Agreement a Step to Make the Southern Gas Corridor a Reality

Tuesday marked a major step forward in the movement of natural gas from the Caspian region to Europe.

Turkey and Azerbaijan signed an intergovernmental agreement to build the Trans-Anatolian natural gas pipeline (TANAP), which would carry gas from the second phase of the Shah Deniz gas field in Azerbaijan to European markets.

The formal signing between Turkish Prime Minister Tayyip Erdogan and Azeri President Ilham Aliyev follows a preliminary agreement of last December to build the pipeline, which is to move 16 billion cubic meters of gas, of which 10 BCM is destined for Europe with the balance for the Turkish market.

With an estimated cost of $7 billion, construction on the TANAP pipeline is expected to start at the end of 2013 or in early 2014, with the project's first phase to be ready in 2018 to coincide with first deliveries from Shah Deniz II.   

In addition to transporting gas from the Shah Deniz project, TANAP would provide scalable capacity to accommodate future gas exports from Azerbaijan’s other projects, as well as gas from Turkmenistan.

SOCAR, the Azeri state oil company will hold an 80 percent interest in TANAP, while the balance is divided between Turkey’s state-run pipeline operator BOTAS and petroleum corporation TPAO.  Signing of the final agreement was thought to be delayed due to a dispute over ownership interests, with Turkey reportedly seeking a larger stake in the project.

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