A New Business Strategy for TAP Pipeline, Trans Balkan Pipeline (TBP) the new West Nabucco, Turkmenistan and Iran can provide the EU with natural gas through TANAP?

By Athanasios Pitatzis
In today’s article we will introduce a new business strategy for TAP Pipeline. Secondly we will propose the construction of a new pipeline project the Trans Balkan Pipeline. Also we will investigate the possibilities of Turkmenistan and Iran to sell natural as to EU through TANAP.
New Business Strategy for Tap Pipeline
From the beginning of the choice of TAP pipeline from Shah Deniz Consortium for the connection pipeline between TANAP and the European Markets started a geopolitical war between EU and USA from one side and Russia from the other side. Until December 2014 Southern Gas Corridor it was a monopoly route for the natural from Azerbaijan, but after the cancellation of South Stream from Russia and the announcement of the construction of Turk Stream the geopolitical game is becoming very complex. Many analysts from the West declare that this decision is a Russian dream and will never happened but until now the things seems to run very fast, more specific the construction of Turk Stream will begin until the end of this year according to the statements from the Russians officials. Also we must take consideration that TAP pipeline is a pipeline in the internal market of the EU and for that reason we must let the market forces to decide which natural gas will pass from this pipeline, until now we have we now sure that from this pipeline will pass 10 bcm from Azerbaijan from 2019 and beyond.

Source of the photo: http://www.tap-ag.com/the-pipeline/the-big-picture/southern-gas-corridor

For the geopolitical stability of the Southern Gas Corridor USA and EU must reach to an agreement with Russia to end the conflict to Ukraine. Also EU and USA foreign policy makers must take in consideration that the diversification of natural gas sources for EU isn’t a political plan but involves very difficult economic and technical aspects.

First Proposal for TAP Pipeline

TAP will begin the construction according to the project planning the next year, so we propose to increase the capacity of the pipeline from 10 bcm to 30 bcm for the first phase of the construction.

According to the EU Commission’s Regulation, TAP granted “Third Party Access” exemption to 50% of TAP, while left another 50% for Third Party Access. This means that Gazprom can request TPA to transport its gas via TAP (as a supplier, not an owner) if Turk Stream become a reality. This mean that in the first phase TAP can deliver to EU 15 bcm of Russian gas and 15 bcm of Azeri gas. It is obvious that TAP as a transit pipeline can’t involve in geopolitical games, so which gas will run through TAP, natural gas price will determine it.[3]

According to Shah Deniz Consortium this field can deliver from 2025 and beyond 25 bcm per year from 16 bcm per year on 2019, this increase probably will be directed to Turkey, because Turkey is a promising market with predictions for annual natural gas consumption for the future are very encouraging. Also let’s observe the graph below for the future natural gas sources for Europe from Caspian Region according to the Oxford Energy Institute.

Source of the photo: Dickel, R. et al., 2014. Reducing European Dependence on Russian Gas: distinguishing natural gas security from geopolitics, Oxford Energy Institute

Second Proposal for TAP Pipeline

We propose to the TAP to increase its capacity from 30 bcm to 50 or even 60 bcm from 2020 and beyond if we take into account the North LNG Import Terminals in Greece (Alexandoupoli and Kavala of total capacity on average 7-10 bcm per year) and of course the possible oil and gas fields of South East Mediterranean. So a future scenario is through TAP pipeline from 2022 and beyond to run Azeri, Russia and LNG natural gas.

We want to mention some key features for TAP Pipeline:

  • Greek government must cooperate with the companies of the pipeline very close. Also the state companies of Greece must involve in the project, like DEPA.
  • Because TAP for now has only one source for natural gas (Azerbaijan) must cooperate with DEPA (Kavala LNG) and Gastrade (the operator of the LNG Terminal in Alexandroupolis) to find alternative sources to import natural gas. For instance Algeria, Israel and Cyprus are very beneficial choices to import natural gas because they located in the Mediterranean. An alternative for the future probably is Qatar or USA LNG. Also according to the international media and the officials of Egypt the country probably will be able to export natural gas from 2020 and beyond.
  • The companies of TAP pipeline such as Statoil, BP and Socar has a unique opportunity to involve to exploration and production of hydrocarbons of South – East Mediterranean. Also if they cooperate with the major operators of the region such as Energean Oil and Gas, Hellenic Petroleum, ENI, Delek and Noble Energy then the future of the area seems very promising.  Although we must take into account for the above scenario the oil prices and that according to the experts the break – even point of the South – East Mediterranean exploration is 75$ per barrel at least, so with the oil prices at 50$ the exploration in the region is unprofitable for the companies.

TAP Pipeline the catalyst for the peace in Ukraine

Yesterday when i was writing this article I observe in the international media that Brendan Devlin, advisor in the Commission’s DG energy said “It doesn’t matter who the shipper is, and we don’t care if it is Russian gas, Libyan gas, Azeri gas”. The internal market works like that.” This mean that European Commission will allow Gazprom to use TAP Pipeline. [1]

Source of this photo: Union, E., 2013. FACT SHEET RUSSIAN GAS IMPORTS TO EUROPE AND SECURITY OF SUPPLY – FACTSHEET. , pp.5–7. by the Clingendael International Energy Program (CIEP), an affiliate of the Netherlands Institute of International Relations

If Russia redirect the biggest share of natural gas supply for Europe from Ukraine through Turkey in mid-term future then the conflict in Ukraine probably will come to an end more soon than we think.

Trans Balkan Pipeline – TBS

Source of the original photo: http://www.tap-ag.com/the-pipeline/route-map

If we take into account that the amount of natural gas will exist in TAP Pipeline from 2020 and beyond we need a second pipeline to transfer natural gas to the central Europe, let’s examine this with numbers in a future scenario.

Capacity of TAP after 2020: 50 bcm per year

Natural Gas Sources for TAP:

Turk Stream: 50 bcm per year

TANAP Pipeline: 10 bcm per year or in the future 15 or 20 bcm according to the production from natural gas fields of Azerbaijan

North LNG Import Terminals of total capacity on average 7-10 bcm per year

Total amount: 75 bcm per year on average, so the TAP Pipeline will be in full capacity. Also to redirect natural gas flow to Europe from North Greece we have until now two options:

  • IGB Pipeline (Interconnector Greece Bulgaria) 5 bcm of capacity
  • Pipeline through sea with direction to Italy 10 bcm of capacity until now, if we upgrade TAP as we propose above then this pipeline for Italy can be upgrade it to 20 bcm.

The remaining 25 bcm of the TAP must be redirected through another pipeline to the Central Europe, in this case we propose a new pipeline the TBS with these specific characteristics:

  • Pipeline route can begin from Thessaloniki and from there to Fyrom, from there to Serbia and from there to Hungary and then to Austria.
  • Capacity of the pipeline 20-30 bcm on average per year
  • TAP Consortium can be the leader of this project and the construction of this pipeline can begin from 2018 and beyond when the situation will be clearer.

Problems with natural gas supply in Europe – Groningen Natural Gas Field

Source of the photo: Dickel, R. et al., 2014. Reducing European Dependence on Russian Gas : distinguishing natural gas security from geopolitics, Oxford Energy Institute.

According to the natural gas Europe website earthquakes force Netherlands authorities to reduce natural gas production from this field. If for some reason this field close or reduce rapidly the production then Central and North Europe will have major problems with natural gas supply. If we observe the graph above if due to the earthquakes Groningen field shut down, half of the production of the Netherlands will lost with the implications of this situation for Europe to be so many. So if this field shut down in the future we are talking about 30 bcm gap in natural gas supply of Europe in mid-term future.

Turkmenistan – A new natural gas source for Europe?

According to the Journal of Petroleum Technology – Cover for Caspian Region- November 2014  we will mention some facts about natural gas sector of this country:

  • China National Petroleum Corporation (CNPC) is the only foreign company with direct access to an onshore development, the Bagtyiarlyk project near the Amu Darya River, through a 35-year PSA [2]
  • The Galkynysh field located in Turkmenistan’s Mary province is considered the second largest deposit in the world, with reserves stands between 13.1 Tcm and 21.1 Tcm of gas estimated by independent auditors, Gaffney, Cline & Associates. Also known as South Iolotan, the Galkynysh field has been developed under a service contract by CNPC, Dubai-based Gulf Oil & Gas, London-listed Petrofac, and a South Korean consortium of LG International Corporation and Hyundai Engineering Company. Because most of the gas available for future development is high in hydrogen sulfide and carbon dioxide and has a greater pressure and temperature, these factors pose technical challenges, thereby requiring greater capital costs for exploration and development. ( this means more expensive price for Europe in the future if Europe imports gas from there) [2]
  • Lack of infrastructures – Ten of billions dollars in investments needed to triple its natural gas output by 2030  as Douglas Uchikura, president of Chevron Nebitgaz, told Reuters[2]
  • Trans Caspian Pipeline – Big Budget – Lack of political support – Transit fees will increase the price of natural gas[2]
  • China Development Bank will provide financing to Turkmenistan’s state-owned energy company, Turkmengaz, for the second stage of development at Galkynysh – China increasing natural gas consumption, according to the International Energy Agency it is expected to double until 2019 and reach to 360 bcm per year, this means that all the natural gas exports of Turkmenistan will direct in China[2]

It is obvious that Turkmenistan is not an option for the supply of Europe with natural gas until 2030.

The bullet points for Turkmenistan natural gas sector derived from the Journal of Petroleum Technology – Cover for Caspian Region- November 2014 (Society of Petroleum Engineers)


Chinese Natural Gas Demand Reality and Medium-term Perspective, Source: Series, P.C., 2011. Update on Overseas Investments by China’s National Oil Companies.(International Energy Agency)

Iran – Natural Gas Exports to Europe?

Our estimate is that until Iran don’t dissolve its dispute for the Nuclear Program with West will not be able to develop its huge natural gas reserves. Let the time to guide us about this situation which involve geopolitical, economic, military and geostrategic aspects.


It is obvious from the above analysis that:

  • TAP Pipeline can become the only transit pipeline in North Greece
  • North LNG Import Terminals will play a vital role in the future supply of South East Europe with Natural Gas
  • Trans Balkan Pipeline can become a reality
  • South East Mediterranean is one of the little choices of Europe for diversification of natural gas sources
  • Turkmenistan and Iran will not be able to provide natural gas to Europe until 2025 (authors personal estimation)

Athanasios Pitatzis, Production and Management Engineer, Democritus University of Thrace, 2014-2015 Postgraduate student in TEI Eastern Macedonia and Thrace (Kavala) in the Masters of Science in Oil and Gas Technology (http://msc.petrotech.teikav.edu.gr/). Also I possess a Certificate-Seminar E-Learning on Geopolitics and Security Issues in the Islamic Complex Turkey-Middle East from Ethnikon and Kapodistriakon University of Athens.

I write articles on Greece within a variety of internet web portals in the fields of Geostrategy, Geoenergy and energy policy.

[1] Russia can use Trans-Adriatic pipeline, Commission confirms,http://www.euractiv.com/sections/energy/russia-can-use-trans-adriatic-pipeline-commission-confirms-312688

[2] Journal of Petroleum Technology – Cover for Caspian Region- November 2014 (Society of Petroleum Engineers), http://www.spe.org/jpt/

[3] The new Greek Government: Implications for Azerbaijan’s DESFA purchase, by Ilgar Gurbanov is an analyst on Russian policy and energy security of strategic outlook from Azerbaijan  http://www.naturalgaseurope.com/syriza-implications-for-azerbaijans-desfa-purchase-22491

It was first published on Cyprus Gas News, the following link: http://www.cyprusgasnews.com/archives/7472/a-new-business-strategy-for-tap-pipeline-trans-balkan-pipeline-tbp-the-new-west-nabucco-turkmenistan-and-iran-can-provide-the-eu-with-natural-gas-through-tanap/

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