The official announcement of the Trans Adriatic Pipeline as the winning project to carry out Azerbaijani gas to Europe is expected on Friday, June 28
TIRANA, June 23 – After apparently holding free and fair elections, a key condition set by international partners for consolidating democracy and paving the country’s road to European Union integration, there is more good news for Albania. The Trans Adriatic Pipeline (TAP) has been announced as the winning project to carry Caspian gas to Europe through Greece, Albania and Italy. The decision is expected to give a major boost to the crisis-hit Albanian economy and its top trade partners Italy and Greece facing recession. The investment would have a major impact on the contribution to GDP, number of jobs created and tax revenues raised, and most importantly, make Albania a regional gas hub, experts say.
Although not officially confirmed by the Shah Deniz II consortium, Nabucco West, TAP’s only rival, has conceded defeat in the long race.
In a statement issued on Wednesday, Austria’s OMV, which is the main shareholder in the Nabucco West consortium, said it had been informed by the BP-led Shah Deniz II consortium that it has not been selected to carry Azeri gas to Europe. This automatically makes TAP the winning project.
Austria’s OMV said it had been told that higher gas prices in Greece and Italy had tipped the decision in favour of TAP. “While OMV accepts the decision of the consortium, OMV is of the opinion that the offer which was submitted by Nabucco Gas Pipeline International Gmbh (NGPI) met all the selection criteria and was highly competitive.”
“The Nabucco project is over for us,” OMV Chief Executive Gerhard Roiss told a news conference after the company announced it had not been selected, putting to rest the suggestion Nabucco could also be built eventually once more Caspian Sea gas becomes available.
TAP, which is fronted by Norway’s Statoil, Swiss company AXPO and E.ON Ruhrgas of Germany, declined to comment ahead of an official announcement expected on Friday but sources from companies and governments involved said TAP had been chosen, Reuters reports.
The TAP pipeline will collect Azeri gas in Turkey and carry it across Greece and Albania before reaching southern Italy, stretching 870 kilometres (540 miles).
Nabucco West was more ambitious, tracking a 1,329-kilometre route north from Turkey to Austria via Bulgaria, Romania and Hungary. Neither group publicly announced costs, but TAP due to its shorter route was widely considered the less expensive project.
BP, Statoil and state energy company SOCAR are leading development of Azerbaijan’s vast Shah Deniz II gas field in the Caspian Sea, one of the world’s largest.
Azerbaijan’s SOCAR emerged last week as sole bidder for Greece’s gas network, a fact which analysts said helped TAP’s position.
The decision means the shorter and cheaper Trans-Adriatic Pipeline (TAP) will be used to carry the gas extracted from under the Caspian Sea to the European market.
The decision over TAP’s selection was reportedly delivered to Greek Prime Minister Antonis Samaras in Athens on Wednesday by representatives of British Petroleum in Shah Deniz and the Azeri state energy company Socar, according to Greece’s Kathimerini.
Albania, Greece and Italy signed in Athens in February an agreement that gives the full political backing of the three countries to the TAP project.
The European Union had initially favoured the Nabucco project and then the slimmed down Nabucco West concept but in recent months had taken a neutral stance.
“It will mean greater liquidity and greater security of supply; the opening up of additional supply to Greece and Italy,” Philip Lowe, head of the European Commission’s energy directorate, said on Wednesday as quoted by Reuters. Europe is looking to Azeri gas to ease its dependence on Russian supplies, which currently account for around 30 percent of all EU gas imports. The figure rises to nearly 100 percent in some EU states, such as Bulgaria and Lithuania.
Europe, where gas demand is projected to rise by 20 percent by 2035, according to the International Energy Agency, also needs to safeguard supply in the face of rising Asian buying.
TAP’s chances received a boost in the past few months as a cheaper and faster alternative to EU-backed Nabucco which was undermined by Russia’s even bigger South Stream plan.
In response to Europe’s quest for Caspian supply, Russian gas export monopoly Gazprom has put forth its $39 billion South Stream project which would pipe gas to northeast Italy through the Black Sea.
Regional gas hub
Albanian experts have described TAP as an opportunity that would benefit Albania both economically and politically, making the country an important hub of the international gas pipeline for the Western Balkans.
With domestic electricity generation 100 percent dependent on hydropower plants and rainfall, TAP would be another opportunity to diversify generation especially in the newly-built Vlora thermal power plant which although made available for use since more than one year has not been made operational because of its high cost on fuel operation. TAP would also help the country’s gasification by offering gas, already massively used as a cheaper alternative to electricity for cooking and heating, although the country’s buildings lack gas infrastructure. The passing of the oil pipeline through Albania would also pave the way for the construction of the Ionian-Adriatic pipeline making Albania a gas hub to other Balkan regional countries, experts say.
Entering from Greece at Miras in the Kor衠region, the Albanian section of the route stretches a total of 209 km to the coast, north-west of Fier. The offshore section will be 60 km in length, crossing the Adriatic Sea entering southern Italy.
The pipeline developers plan to begin construction in 2015 and have the first gas by 2019.
Berisha hails TAP decision
Outgoing Prime Minister Sali Berisha, who strongly lobbied TAP project, described TAP as the project of the century for Albania.
“Dear friends, the TAP project has been selected, Albania won, this is the project of the century for us,” wrote Prime Minister Sali Berisha on his Facebook profile on Wednesday, breaking his silence three days after the June 23 general elections which he lost by a landslide to Socialist Party-led left wing coalition. Later on Wednesday evening, he conceded defeat and resigned as Democratic Party leader after 22 years.
“This is Albania’s greatest strategic achievement after the NATO membership. I expressed my deepest gratitude to the Azerbaijani government and the Shah Deniz consortium for the selection of TAP,” said Berisha on Thursday’s government meeting, adding that the TAP project would provide a final solution to the energy situation in Albania.
Impact on economy
If selected as the winning pipeline to bring Caspian gas to Western Europe, the Trans Adriatic Pipeline (TAP), which also includes Albania in its itinerary, would have a major impact on the contribution to GDP, number of jobs created and tax revenues raised, a study conducted by Oxford Economics has found out.
During its scheduled four years of construction from 2015 to 2018, TAP will contribute a total of Euro 370 million to the Albanian GDP, create on average 9,900 jobs per year and generate Euro 80 million for the country’s treasury. As a result, during its expected 50 years of operation, inclusive of direct, indirect and induced impacts, the project is predicted to contribute a total of Euro 2.7 billion to the Albanian GDP, create 240 jobs per year and generate Euro 2.5 billion in tax revenues. TAP’s investment is expected to provide a range of wider, ancillary benefits to the country. The project team expects to invest some Euro 60 million in Albania’s roads and other infrastructure, helping to pave the way for further growth in the country. Similarly the pipeline will help to cement the country’s strategic objective of becoming an energy hub for South East Europe, allowing it to supply gas to the entire Balkan region.
