Uchenna Izundu
International Editor
LONDON, Feb. 14 -- StatoilHydro AS and Swiss company EGL Group will build the 10 billion cu m/year Trans-Adriatic Pipeline (TAP) under an accord signed on Feb. 13. The TAP gas system will to bring supplies to Europe from Turkey and Greece by 2011, depending on shipment needs (OGJ Feb. 13, 2006, p. 57).
The $2.2 billion, 520-km system will deliver gas through the Adriatic Sea. However, StatoilHydro indicated that the cost could increase depending on the time of construction, international steel prices, and other pipeline equipment-related costs. Major oil and gas projects are facing cost challenges and have been delayed because of a tight supply market and escalating production costs.
TAP will link existing Greek pipelines with southeastern Italy and facilitate a new delivery corridor from the Caspian Sea and the Middle East towards Western Europe. The partners, which have formed a 50-50 joint venture for TAP, have the option to increase the line's capacity to 20 billion cu m/year. The European Union has prioritized the pipeline—which is in the front-end engineering stage—under its Trans-European Energy Networks guidelines.
The companies plan to take a final investment decision by second half 2009.
Rune Bjornson, StatoilHydro executive vice-president for natural gas, said: "Our joining of the TAP project should be viewed as a move to offer an attractive market outlet for the Shah Deniz gas to the European market." StatoilHydro holds a 25.5% stake in the field, which is in the Azeri part of the Caspian Sea. Recently, additional reserves were proved to support the development of a second stage of the field.
EGL signed a 25-year deal last year with the National Iran Gas Export Co. to deliver 5.5 billion cu m/year of gas to Europe (OGJ Online, Jan. 2, 2007).
Contact Uchenna Izundu at [email protected].
