February 12, 2018

by AEA in News, Publication

Albania an important energy hub for the Southern Gas Corridor

Topics in this presentation :

Existing and planned import pipelines to Europe
Natural gas demand on the Balkans is expected to grow by 24.9 bcm/a (+ 68 %) to reach 61.3 bcm/a in 2035
The Balkan Gas Hub/ East and West connects all major gas supply projects
The Albania/Balkan region and Europe as a whole would strongly benefit from a realization of the Balkan Gas Hub East/West concept
Regional primary energy production in the WB
First natural gas discovery and production in Albania dates 1960.
Natural Gas Role in the Albanian Energy Balance
Ionian – Adriatic Pipeline
Albania Natural Gas Forecast
Realistic potential area for developing the gas transmission and distribution pipeline
Underground Gas Storage potentials of Albania.

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August 1, 2017

by AEA in News

Italian Snam, Albanian Albgaz sign MoU on gas market development

Italian gas infrastructure company Snam and Albania’s gas infrastructure operator Albgaz have recently signed a memorandum of understanding (MoU) to develop collaboration opportunities, said a message published on the Snam website July 31.

The MoU is aimed at supporting the start and development of an infrastructure system that will be managed by the Albanian company. The agreement comes in relation to the gas market development that will start with the TAP pipeline crossing Albania.

TAP is a part of the Southern Gas Corridor, which is one of the priority energy projects for the European Union. The project envisages transportation of gas from Azerbaijan’s Shah Deniz Stage 2 to the EU countries.

The pipeline will connect to the Trans Anatolian Natural Gas Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south.

TAP will be 878 kilometers in length (Greece 550 kilometers, Albania 215 kilometers, Adriatic Sea 105 kilometers, and Italy 8 kilometers).

Snam Source: Snam e Albgaz, l’operatore infrastrutturale del mercato gas in Albania, hanno firmato un accordo (Memorandum of Understanding) finalizzato a sviluppare ambiti di collaborazione a supporto dell’avvio e dello sviluppo del sistema infrastrutturale che verrà gestito dalla società albanese, in connessione alla metanizzazione prevista con l’arrivo del gasdotto TAP nel Paese.

L’accordo si inquadra nell’ambito delle attività avviate dalla business unit Snam Global Solutions con l’obiettivo di valorizzare a livello globale le esperienze, le competenze e il know-how distintivi di Snam, sviluppati nei suoi 75 anni di attività e gestione dell’intera filiera infrastrutturale del gas in Italia e in Europa.

La collaborazione è rivolta, tra l’altro, a supportare Albgaz nello sviluppo del piano di infrastrutturazione necessario ad avviare il mercato del gas e l’implementazione delle best practice caratteristiche delle attività gestite da Snam.

Albgaz è stata creata nel gennaio 2017 e ha la responsabilità della realizzazione e gestione delle infrastrutture per il mercato del gas albanese.

Snam

Snam gestisce la rete di gasdotti più estesa e accessibile d’Europa (oltre 40.000 km di lunghezza), la maggiore infrastruttura di stoccaggio (con una capacità di 19 miliardi di metri cubi) e uno dei primi terminali GNL realizzati nel Continente. Gli investimenti di Snam in Europa sono finalizzati a favorire l’integrazione delle reti energetiche europee e a promuovere il gas come pilastro di un mix energetico sostenibile. Facendo leva sulle proprie competenze distintive, la società ha lanciato recentemente Snam Global Solutions, che offre attività di studio, consulenza e project management per il mercato.

Albgaz

Albgaz è l’operatore designato per lo sviluppo e gestione del sistema infrastrutturale del gas in Albania, per tutte le attività di trasporto, distribuzione, stoccaggio e rigassificazione.

August 29, 2016

by AEA in News

SOCAR JOINS NEW ADRIATIC PIPE PROJECT

Four western Balkans nations signed a memorandum of understanding with Azerbaijan state Socar on co-operation on building the Ionian Adriatic pipeline (IAP) on the sidelines of a Dubrovnik forum 25-26 August.

The declaration of intent to develop the 5bn m³/year line was originally signed in 2007 by Croatia, Montenegro and Albania. The length of the line from Split in Croatia to Fier in Albania will be around 530 km and cost around €610mn ($683mn).

Socar will join Croatia, Albania, Bosnia & Herzegovina and Montenegro in the project which will include a section of the Trans-Adriatic-Pipeline (TAP) designed to bring gas from Shah Deniz 2 field in the Caspian Sea to EU through the so-called Southern Gas Corridor (SGC) after 2020.

Socar’s goal is to connect the Caspian Sea and the Adriatic Sea, the head of Socar Balkans, Murad Heydarov, said after the signing ceremony. “The SGC, which includes the Ionian-Adriatic gas pipeline is an important part of our plans, we have good co-operation with the countries involved in this project,” he said, according to Socar sources.

Croatia’s economy minister Tomislav Panenic said that the future pipeline would provide gas supplies for southeastern Europe. “We have defined our joint initiative for the development of the Ionian-Adriatic gas pipeline as a route that will make sure that these markets are provided with gas. We hope that this route will be a connection between the north and the south and that this may pave the way for a full liberalisation of the gas market in Europe,” he said, Croatian news agency Hina reported.

Montenegro’s economy minister Vladimir Kavaric said that IAP was the only opportunity for the gasification of Montenegro and “the government is ready to do everything to accelerate and successfully implement the project.”

According to Bosnia & Herzegovina’s foreign trade minister Mirko Sarovic, “Bosnia & Herzegovina supports this regional project and approach and ask the partners to ensure that a section of the route goes through Bosnia & Herzegovina.”

Dubrovnik Forum. From left: Presidents of Hungary Janos Ader, Lithuania Dalia Grybauskaite, Poland Andrzej Duda, Croatia Kolinda Grabar-Kitarovic, Bulgaria Rosen Plevneliev and Slovenia Borut Pahor.

According to preliminary design IAP aims to connect existing transmission system of Croatia via Bosnia & Herzegovina (offshore), Montenegro and Albania to the TAP.

The Baltic-Adriatic-Black Sea (BABS) forum brought together six presidents and high-ranking government officials from 12 EU countries and Albania on August 25-26 in Dubrovnik, Croatia. A panel discussion at the “Strengthening European energy security” looked at the benefits of energy cooperation in BABS and the role of LNG terminals linking north and south Europe.

Connecting the LNG terminal in Poland with one planned on the island of Krk in Croatia is among the energy projects that BABS region countries want to implement in order to boost competitiveness and development, Croatia’s president Kolinda Grabar-Kitarovic and Poland’s president, Andrzej Duda, said addressing forum at the opening ceremony August 25.

President Duda pointed out the importance of energy connections.“The dominance of a single supplier for the region is harmful and dangerous”, he said adding that development of the gas corridor between the north and the south, as well as the LNG terminal on the island of Krk are important.

The next meeting of BABS will take place in Wroclaw in June 2017.

July 26, 2016

by AEA in News

Socar is running into problems concerning Desfa

Azerbaijan’s state energy company Socar is running into problems concerning its stake in Greece’s natural gas grid operator, Desfa, with the Greek parliament expected to vote imminently for a crucial change concerning the value of Desfa.

As a result, Socar is expected to send a delegation of senior officials to hold talks in Athens this week. They will address two main problems. The first concerns the size of Socar’s stake in Desfa. The second – which is both far more important and far more complex – concerns the methodology of accounting within Desfa.

The first point is relatively straightforward. When Socar won the tender to acquire a 66% stake in Desfa for €400mn in June 2013, purchasing a 35% stake from Hellenic Petroleum and a 31% stake from Greek government, it had strong EU backing, not least because the leading alternative bidder was a Russian company, Sintez. At the time, the EU was also worried that Gazprom would seek to purchase Desfa’s parent company, Depa, the Greek natural gas supply company. In the event, however, nobody bid for Depa and only Socar bid for Desfa.

But in late 2013, Socar was a party to the final investment decisions which secured the development of the cluster of projects known as the Southern Gas Corridor, which included development of the giant Shah Deniz Phase Two project and the associated Trans-Adriatic Pipeline. This potentially put Socar in conflict with EU regulations since Socar would be a shareholder in TAP – it subsequently took a 20% stake in the pipeline – and because the line would be used to carry SD2 gas that was partially owned by Socar to market in Greece, Albania and Italy – and probably Bulgaria as well.

Socar therefore agreed to reduce its stake in Desfa to 49%. A senior Socar official, contacted by NGE in Baku recently, said that Italy’s Snam-Rete has agreed to take up part of this 17% and that discussions are continuing with other prospective buyers. Socar’s president Rovnag Abdullayev has previously mentioned Spain’s Enagas as a possible buyer. This issue may take time to solve but, the official said, the company is confident that it will be resolved satisfactorily.

It is the second issue that is truly troublesome. Greek energy minister Panos Skourletis recently submitted an amendment current regulations intended to reduce Desfa’s regulatory asset base, apparently from around the €1bn figure assumed by Socar to around €800mn. This would be accomplished by taking out some €200mn in government funds that Desfa had included in the regulated asset base in the initial three-year period. The ministry is asserting that this €200mn should not have been included in the original methodology.

However, a €200mn reduction would radically change the basis on which Socar would be able to secure a return on its initial investment. According to Greek regulations, Desfa is guaranteed to secure an 11.5% return upon its regulatory asset base. And if it does not get the money in the first three years, the guarantee is that it will be able to make up the difference in the second three-year period. This would be achieved by increasing tariffs.

The problem is that if the value of the regulated asset base is reduced in the manner proposed by Skourletis, tariffs would have to be increased by around 80% in order to ensure Socar received a full 11.5% return over both the initial three-year period from 2013-16 and the following three-year period from 2016-19.

And such an increase would be intolerable for Greece’s gas consumers at a time of continued severe economic constraint. Moreover, reducing the value of the regulated asset base could reduce the prospect that Snam-Rete and other companies might be willing to invest in Desfa.

From Socar’s perspective, there are two main problems in this dispute. The first is one of perception, that there has been a lack of government communication with Socar about the issue. What’s happening, one senior Socar executive commented privately, is “government by press release.”

The more substantive problem is how to square the dilemma that Socar should receive its promised internal rate of return without Greek natural gas customers having to pay far more than they can afford.

One possible solution is that the shortfall in payments from the first three-year period may be amortised. But other alternatives are also being explored. At this stage, no-one is sure just how the situation will develop.

June 30, 2016

by AEA in News

World Bank set to finance criticised mega gas pipeline from Azerbaijan to Europe

Defined as “the biggest infrastructure project of our times“ by the European Commission and a priority for the European Union, the Southern Gas Corridor was always going to attract the attention of the World Bank. As part of Turkey‘s Country Partnership Strategy (CPS), the Bank has announced its intention to finance the project through a double loan to Azerbaijan and Turkey. In addition, in June the World Bank’s Azerbaijan office announcedpossible loan guarantees for the construction of the Trans-Anatolian section of the corridor (TANAP) through the Bank’s Multilateral Investment Guarantee Agency.

Tapping gas from the Shaz Deniz II field in Azerbaijan, TANAP stretches for 1,820 km from Georgia to Greece and will cross Turkey. TANAP is expected to bring 16 billion cubic metres of gas per year to Turkey by 2018, subsequently increasing capacity with the construction of the western section of the Southern Gas Corridor, running to Italy through Greece and Albania.

The Southern Gas Corridor is a priority for the European institutions as part of their Energy Union strategy to secure alternatives to gas imports from Russia. According to press reports by Reuters, the World Bank loans – scheduled for approval in 2017 – would amount to $500 million for Azerbaijan and $1 billion for Turkey and would help cover the overall $45 billion project cost. Other funders include the European Investment Bank. The World Bank’s principal proposed development objective is the enhancement of Azerbaijan’s gas exports up to three times the current volumes and the improvement of “the security and diversity of Turkey’s and Europe’s energy supply.“

It is concerning that the World Bank risks ruining its reputation for a project that will contravene the Bank’s safeguard standards, while harming the environment and supporting controversial regimes.

The wide range of risks and consequences associated with the construction of this megapipeline has provoked a heated debate. Concerned about the support that such a controversial project has received from public international financial institutions, civil society across Europe has mobilised to raise awareness among citizens and decision makers about the project‘s environmental and geopolitical implications and to prevent its funding, arguing that the project contradicts with the climate goals that the World Bank and the European public banks committed to in Paris last December. By considering financing the Southern Gas Corridor, yet another mega fossil fuel project, the World Bank is contradicting its commitment to integrate climate risks and opportunities into all of its development work and is disregarding the agreed upon urgency to shift to a different energy model based on renewables and energy efficiency. Furthermore, it means that the Bank is ignoring calls by the scientific community to leave the majority of remaining fossil fuels reserves in the ground. As the world’s leading development finance institution and self-professed advocate of environmental sustainability, it should set an example and stop supporting such emblematic fossil fuel projects.

The geopolitical context surrounding the Southern Gas Corridor is just as worrisome. Neither the autocratic regime of Ilham Aliyev in Azerbaijan nor the increasingly repressive rule of Recep Tayyip Erdoğan in Turkey are ideal partners for such an enormous project. Ilham Aliyev, who has ruled the country for decades, has attracted international attention following a severecrackdown on dissent in 2014 that resulted in mass jailings of journalists, intellectuals, human rights activists and lawyers. The unacceptable human rights situation in Azerbaijan has been repeatedly denounced by governments and media worldwide. This led to offical warnings by theEuropean Parliament, the Organisation for Cooperation and Security in Europe and the Council of Europe throughout autumn 2015, all overtly discouraging Europe from directly financing the regime, let alone sealing a historic business deal worth billions of dollars.

Moreover, this project would not bring major development improvements to Azerbaijan. Heavily dependent on fossil fuel exports, the Azeri economy has recently faced a deep crisis due to the fall in oil prices which led to the devaluation of the national currency. Instead of diversifying the sources of revenue in Azerbaijan and promoting its sustainable development, the Southern Gas Corridor would exacerbate this dependence, consolidating the hold of the existing ruling elite while bringing little or no benefit to the Azeri people.

The World Bank can also not turn a blind eye to the current situation in Turkey. While Erdoğan’s control of the press increasingly limits citizens‘ freedom of speech and opinion, the pipeline would cross Kurdish regions that are currently affected by an escalation of violence following the breakdown of peace talks in July 2015.

Civil society organisations have highlighted these concerns and challenged the public financing of the Southern Gas Corridor. It is concerning that the World Bank risks ruining its reputation for a project that will contravene the Bank’s safeguard standards, while harming the environment and supporting controversial regimes. If the Bank does not want to bear this responsibility, it should not be part of the Southern Gas Corridor deal.

Guest analysis by Xavier Sol, Counter Balance

May 17, 2016

by AEA in News

Maros Sefcovic: Southern Gas Corridor is true diversification project

Sefcovic made the statement at the Greek Energy Forum in Thessaloniki, Greece.

As the initiator of the biggest Southern Gas Corridor project, Azerbaijan has become a very important energy player at the regional and global levels, said Maros Sefcovic, vice-president of the European Commission for Energy Union, Trend reports.

The vice-president stressed that the EU is the largest importer of energy resources in the world.

Sefcovic called the Southern Gas Corridor the true diversification project, as it will provide the European countries with a new source of gas supply [the Caspian region] and a new supply route [the Trans Adriatic Pipeline – TAP].

At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan’s Shah Deniz field is considered as the main source for the Southern Gas Corridor projects.

Sefcovic said that Turkmenistan, Iraq and the Mediterranean region can also be the potential sources of gas supplies as part of the Southern Gas Corridor.

The vice-president added that the European Commission expects the first gas to be supplied to Turkey in 2019 as part of the Southern Gas Corridor, while to Europe – in 2020.

Sefcovic also stressed the importance of the TAP groundbreaking ceremony planned to be held in Thessaloniki May 17. He further said that this important event will go down in history.

The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of 10 billion cubic meters of Azerbaijani gas from the Caspian Sea region to the European countries through Georgia and Turkey.

The 870-kilometer pipeline will be connected to the Trans Anatolian Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south. TAP shareholders are: BP (20 percent), SOCAR (20 percent), Snam S.p.A (20 percent), Fluxys (19 percent), Enagas (16 percent) and Axpo (5 percent).