Construction inauguration ceremony for the Trans Adriatic Pipeline

17.05.2016 - A major milestone for the Trans Adriatic Pipeline (TAP): The official construction inauguration ceremony for the pipeline took place in the Greek port of Thessaloniki with high-ranking political figures from various European countries in attendance. By the year 2020, natural gas from the Shah Deniz phase II gas field, located southeast of Azerbaijan’s capital Baku, will flow through TAP to Southern Italy and on to Central Europe. Axpo is the initiator of this geo-strategic, economically important project and holds an interest of 5% in TAP.

The 878-km pipeline will run from the western border of Turkey through Greece, Albania and the Adriatic Sea to Southern Italy. From there the natural gas will flow on to Central Europe. TAP will make an important contribution to ensuring natural gas supply in Europe.

The source of the natural gas is much further east: In 2020, the first natural gas delivery from the Caspian Sea will come through the South Caucasus Pipeline (SCPx) and the connecting Trans Anatolian Pipeline (TANAP) that run from Azerbaijan across Georgia and Turkey, and enter TAP to be transported on to Europe.

Successful pioneering by Axpo

The TAP ground-breaking marks the high point of a nearly 13-year long planning and project phase: Shortly after the turn of the millennium, the Swiss energy company EGL, today Axpo Trading AG, began considering the realisation of a new, fourth corridor for natural gas to Europe. At that time the vision was to procure natural gas at competitive conditions and to develop new supply sources. The vision soon became a strategy: As of 2003, plans for TAP were progressively intensified and pushed ahead.

Axpo’s long-standing pioneering work and cooperation with partners that came on board over the years became a great success: In the summer of 2013, the Shah Deniz Consortium selected TAP as the transport route for the export of natural gas from the Caspian Sea to Europe. TAP had succeeded in prevailing against renowned competitors such as Nabucco. With the launch of pipeline construction another decisive milestone has been achieved.

TAP will diversify Axpo’s gas portfolio

TAP is being developed in a joint venture with the British BP (20%), the Azerbaijani Socar (20%), the Italian Snam (20%), the Belgian Fluxys (19%) and the Spanish Enagás (16%). Today, Axpo holds an interest of 5% in TAP. From 2020 on, the income from gas transport alone will generate a substantial
2-digit million EBIT contribution for Axpo over at least 25 years. The pipeline represents an important means of portfolio diversification and reduces Axpo’s dependency on the current, very low wholesale prices for electricity.

Furthermore, TAP will provide access to attractive markets: In addition to revenues that Axpo generates with the stake in the pipeline, the company has secured considerable gas volumes from the Shah Deniz gas field on a long-term basis. Axpo Trading AG will market these volumes. Supply contracts with the Shah Deniz Consortium were signed in September 2013.

South East Europe with improved infrastructure

For the countries on the TAP route, the project represents an important impetus for job creation and economic development as well as the expansion of infrastructure: Numerous roads and bridges are being built along the pipeline, particularly in Albania, in order to transport the 18-metre long, heavyweight pipes to their destination. While these construction measures primarily give the economy in these structurally weak regions a significant impulse, the TAP measures in the area of social responsibility – such as investment in education and training, socioeconomic development, quality of life of local communities, as well as archaeological and environmentally relevant projects – benefit the entire population.