WB, AIIB Approve $1.4bn loans for Tanap

The World Bank’s board of directors approved a $400mn loan for Turkey and a $400mn loan for Azerbaijan for the Trans-Anatolian natural gas pipeline (Tanap) project December 20.

 Also the Asian Infrastructure Investment Bank (AIIB) approved a $600mn loan for Tanap. The Beijing headquartered bank said December 21 that the loan was granted to Azerbaijan's Southern Gas Corridor Company for building the 1,850-km pipeline.

Tanap will transport gas from the Shah Deniz giant gas and condensate  field in Azerbaijan to, and across, Turkey further to Europe, aiming to diversify Azerbaijan’s gas export markets and improve the security of the energy supply in Turkey and southeastern Europe, WB said in a statement.

The pipeline is part of the southern gas corridor (SGC) programme, which includes the development of Shah Deniz 2, an expansion of the South Caucasus Pipeline across Azerbaijan and Georgia to Turkey; and the Trans Adriatic pipeline (TAP), which carries the gas through Greece and Albania and under the Adriatic Sea to southern Italy.

Reflecting the importance of the overall program for all countries involved in the program, a number of other international financial institutions are also supporting SGC, including the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB).

Southern gas corridor

(Credit: SGCC)

“We are very pleased to be part of a coalition of partners supporting Tanap, a component of the transformational SGC, which will bring natural gas from the Caspian Sea to Europe,” said Cyril Muller, WB Vice President for Europe and Central Asia. “Tanap will not only boost competitiveness and create economic opportunities for people in Azerbaijan and Turkey, it will also support regional trade, improve connectivity, and support energy security in Turkey and in Europe.”

Tanap accounts for over half the 3,500 km SGC from Azerbaijan to Italy. It  begins  at Turkey’s border with Georgia, runs through Turkey from east to west, and at the Greek border will connect to the TAP, which will convey the gas to European markets. Construction of the upstream and midstream elements of the integrated project is already under way.

In Turkey, with the completion of the project, the security of the country’s energy supply will be improved with the addition of 6bn m³/yrt of gas. Tanap will have two connection points with the Turkish grid.

The project contributes to the realization of the main strategic objectives of the broader partnership between the WB and Turkey, including enhanced competitiveness and employment; improved equity and public services; and deepened sustainable development, the bank said.

Shah Deniz 2 will produce 16bn m³/yr, bringing much-needed revenue for the economy. The WB said the project would achieve other strategic objectives of its partnership with Azerbaijan, in particular supporting stronger economic competitiveness; integrating Azerbaijan with regional and European energy markets; and strengthening its connectivity and transit role.

Georgia will also benefit from additional gas to its network as part of the agreement on the transportation of gas from Azerbaijan through its territory to the Turkish border.

The recipients of funding are Azerbaijan's Southern Gas Corridor Company with the guarantee of the  Azerbaijan government and Turkish state-owned gas monopoly Botas with the guarantee of the Republic of Turkey.

Kama Mustafayeva