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UPDATE 2-Top policymakers reassure Europe on Azeri gas deadline
February 23, 2017 / 6:48 PM / 7 months ago

UPDATE 2-Top policymakers reassure Europe on Azeri gas deadline

(Adds stakeholder comments, background)

BAKU, Feb 23 (Reuters) - The Southern Gas Corridor will start pumping gas from the Caspian Sea to Europe by 2020, its backers said on Thursday, despite the risk of delays to this option for reducing dependence on Russia.

Politicians and ministers meeting in Baku backed the $40 billion, 3,500-km (2,200-mile) chain of pipelines, a step towards curbing Russia’s one-third share of Europe’s natural gas market.

The Trans Adriatic Pipeline (TAP) is the project’s end piece, joining up with the Trans Anatolian Pipeline at the Turkish border, then crossing Greece and Albania to reach Italy.

But the slow pace of work in Italy’s Puglia region and growing concern over Azerbaijan’s ability to honour its supply commitments -- it faces domestic shortfalls -- have knocked confidence in the project.

Sponsors sought to soothe concerns. Italian Industry Minister Carlo Calenda said that work to clear a major hurdle to establishing TAP’s landing point in southern Italy -- a grove of more than 200 ancient olive trees -- would begin on Monday.

The trees stand in the way of Europe’s best hope of realising a decade-long plan to open the continent to new gas suppliers.

Local authorities want the pipeline re-routed away from the grove, which includes trees thought to be more than 400 years old. That could delay a project meant, in three years, to carry the equivalent of 10 percent of Europe’s Russian energy imports.

“There are no problems with the construction of the Italian section of the TAP pipeline,” Calenda told reporters in Baku, the capital of Azerbaijan.

In a largely unified front, Azeri President Ilham Aliyev pledged to implement the Southern Gas Corridor on time, saying delays would be unacceptable, though even he seemed to make pointed reference to hold ups on the Italian end.

“Someone can seek excuses in ecological problems, but I‘m sure that all ecological standards are fully respected and the project will be implemented in time,” Aliyev said.

European Commission Vice-President Maros Sefcovic said talks were under way about replanting the trees on time.

BOOSTING SUPPLY

Azerbaijan is also considering using supplies from the Total -operated Absheron gasfield in the Caspian Sea to fill out one of the world’s longest pipeline projects, easing concern over growing domestic shortfalls eating into the share left over for exports.

The BP-led consortium developing Azerbaijan’s giant Shah Deniz II gas field was until now solely responsible for filling the pipeline.

Elshad Nassirov, the vice president of Azerbaijan’s state-run oil company SOCAR, said the consortium developing Absheron had taken part for the first time in a meeting of the Southern Gas Corridor’s supervisory board on Thursday.

Azerbaijan’s Energy Minister Natig Aliyev said countries such as Bosnia, Croatia and Montenegro seeking to join the Trans Adriatic Pipeline section offer new possibilities.

Under this scenario, one section of TAP would continue as planned across Greece, Albania and into Italy, while another part may feed into a separate link, known as the Ionian Adriatic Pipeline, in Albania to go up through the Balkans.

Aliyev said Azerbaijan could also export gas to Bulgaria once the Bulgaria-Greece interconnector was completed in 2019.

A TAP spokeswoman said its route remained unchanged but acknowledged the possibility of spurs feeding into regional infrastructure. (Reporting by Nailia Bagirova, additional reporting by Alissa De Carbonnel in Brussels; Writing by Oleg Vukmanovic,; Editing by Joseph Radford/Ruth Pitchford)

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