StatoilHydro Joins EGL in Trans Adriatic Pipeline Gas Project

Source: www.gulfoilandgas.com 2/12/2008, Location: Europe

StatoilHydro and Swiss EGL Group will sign an agreement to establish an equally-owned joint venture to develop, build and operate the Trans Adriatic Pipeline (TAP).The pipeline will open a new corridor and market outlet for natural gas from the Caspian Sea and Middle East regions into Europe.

The 520-kilometre long pipeline will transport gas via Greece and Albania and across the Adriatic Sea to Italy’s southern Puglia region and further into Western Europe. TAP’s offshore length will measure about 115 kilometres. In its upstream part TAP will interconnect with Greece's existing pipeline system that is linked further to the east with systems in Turkey.

The gas transport capacity of the pipeline will be around 10 billion cubic metres annually, with the option to expand to 20 billion cubic metres. TAP is expected to be operational at the earliest from 2011, depending on the gas shipment needs.

Implementation of the TAP project is subject to a final investment decision planned for the second half of 2009. EGL, which started the project, estimates it will cost 1.5 billion euros to build the pipeline. The final cost will depend on several factors at the time of construction, such as international steel prices and other pipeline equipment-related costs.

TAP is supported by the European Union

The TAP project is in its development phase supported by the European Union (EU) as a “Priority Project” under its Trans-European Energy Networks (TEN-E) guidelines, as it contributes to the EU’s objectives and policies aimed at diversification and security of gas supply.

“We are pleased to join EGL in the effort of offering a new outlet for gas transported from Asia to Europe. We aim to add value to the TAP project by combining our market competence with a strong track-record in developing and building gas pipelines,” said Rune Bjornson, Executive Vice President for Natural Gas in StatoilHydro.

“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,” said Mr Bjornson.

StatoilHydro is today the second largest supplier of gas to Europe. The group holds a 25.5 per cent stake in Shah Deniz, a major gas field in the Azeri part of the Caspian Sea. The field commenced production in 2006. Recently, additional reserves were proven up to support the development of a second stage of the field.

Opening the Eurasia gas corridor

"TAP’s development is a natural consequence of EGL’s supply requirements, while it also matches Europe’s needs to diversify gas sources via the shortest route along a new Eurasian corridor,’’ said Joachim Conrad, EGL's Head of Gas Division and Member of the Executive Management.

“TAP combines the principles of energy security, regional growth, stability and sound solutions, and StatoilHydro’s commitment to join us is proof of our realistic approach and determination with this project.”

EGL has expanded its natural gas procurement portfolio with long-term supply agreements for additional quantities from the Middle East in the amount of 5.5 billion cubic meters per year by 2011, thus enabling the company to make full use of its initial transportation capacity in TAP.

The project also includes the option to develop natural gas storage facilities and a liquefied natural gas (LNG) terminal in Albania, which in turn would further contribute to increasing the security of supply in southeast Europe.

TAP is currently in the front-end engineering stage. The feasibility study was concluded by EGL in March 2006. TAP's extended basic engineering, including the Environmental Impact Assessment (EIA) was concluded in March 2007, and included the offshore survey for the pipeline, which was carried out in 2006.


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