The construction of the Trans Anatolian Natural Gas Pipeline (TANAP) project which plans to carry Azeri gas to Europe, is ahead of schedule and under budget by $3.2 billion, TANAP General Manager said.
The TANAP project aims to bring natural gas, produced from Azerbaijan's Shah Deniz-2 gas field and other areas of the Caspian Sea, primarily to Turkey, but also on to Europe via the Trans-Adriatic Pipeline (TAP).
"More than half of the project, or 55 percent, of its construction was completed at the end of November and we are ahead of schedule," Saltuk Duzyol, TANAP's general manager told journalists at the project's construction field trip on Thursday.
He added that so far, the pipeline with 1,200 kilometers in length and with 56 inches in diameter, has been welded. In addition, a 1,570-kilometer-long area has been cleared and prepared for laying the pipeline.
"We will supply 2 billion cubic meters of natural gas by the end of June 2018 out of a total of 6 bcm to Turkey via TANAP. We will send another 2 bcm the next year followed by 2 more in 2020 as per Turkey's demand," Duzyol explained.
The TANAP starts on the Georgia-Turkey border at Ardahan city of Turkey from where it connects to the South Caucasus Pipeline (SCP) and ends at the Turkey-Greece border in the city of Edirne, where it feeds into the TAP Pipeline.
Duzyol also said the project consists of four phases, phase one starts from Ardahan, through to Kars, Erzurum and then onto Erzincan, Bayburt, Gumushane and Giresun. Phase two will extend to Sivas, and the third phase which will start from Yozgat city to Eskisehir city is 60 percent complete, 55 days ahead of schedule.
The last phase begins from Eskisehir and passes through Bilecik, Kutahya, Bursa, Balikesir, Canakkale, Tekirdag and Edirne until it ends at the Greek border in the Ipsala district of Edirne.
From June 2019, TANAP will deliver natural gas to Europe from the border of Turkey-Greece, Duzyol added.
The TANAP project is planned to be operational in 2018 with an initial capacity to carry 16 billion cubic meters (bcm) of Azeri gas through Georgia to Turkey. While 6 bcm will be for Turkey's domestic gas consumption, the rest is destined for transfer to Greece, Albania, and Italy and further into Europe.
Azeri energy giant State Oil Company of Azerbaijan (SOCAR) holds a 58 percent interest in TANAP, Turkey's BOTAS has a 30 percent share while BP owns a 12 percent stake.
- TANAP will save $3.2 billion
Some of the most expensive items for pipeline projects are fuel and steel, which saw a decrease in costs as a result of low oil prices.
"The slump in global oil prices and low commodity prices also gives the TANAP project an opportunity to shrink its budget and save up to $3.2 billion, initially, the investment budget for TANAP was estimated at $11.7 billion," Duzyol said and added, "With the help of low oil prices, we reduced our budget to $8.5 billion."
Global crude oil prices decreased from their highest level of $115 per barrel in June 2014 to as low as $28 on Jan 18, 2016.
Currently Brent oil prices are fluctuating at around $55 per barrel after the OPEC and Non-OPEC countries aggree to lower their oil production.
With a projected budget of $8.5 billion, TANAP's total capacity is planned to increase to 23 bcm by 2023 and to 31 bcm by 2026.
By Huseyin Erdogan & Nuran Erkul