TANAP to supply Turkey's cheapest gas: SOCAR Turkey

By Nuran Erkul Kaya

BAKU, Azerbaijan

Gas supplies to Turkey via the Trans Anatolian Natural Gas Pipeline (TANAP) project will be the cheapest out of all of the country's gas imports, Vagif Aliyev, board chairman of SOCAR Turkey confirmed Wednesday.

"TANAP gas will be the cheapest gas among Turkey's gas imports. Even tough Turkey's national company BOTAS cannot announce the prices as they are confidential business information, we can say that TANAP is the cheapest one of all," Aliyev, affirmed.

According to sources, TANAP's agreement carries the condition that the Azeri gas would be cheaper than Russian gas - another major gas supplier to Turkey.

Turkey currently imports gas from Azerbaijan's Shah Deniz-1 field, Russia, Iran and through LNG cargoes.

Aliyev confirmed to Turkish media during the opening ceremony of 25th Caspian Oil and Gas Conference in Azerbaijan's capital Baku, that the opening ceremony for TANAP would be held on June 12 in the central Anatolian province of Eskisehir, where the project's compressor station is located.

He said that TANAP, with a capacity of 16 billion cubic meters per year, would deliver 2 billion cubic meters to Turkey in the first year and volumes would gradually rise to 6 billion cubic meters by 2020.

The remaining 10 billion cubic meters is planned for delivery to Europe via the Trans Adriatic Pipeline (TAP), which is expected to be ready to receive gas in 2020.

Aliyev said that TANAP takes the lion's share of costs out of the $40-billion Southern Gas Corridor project. He further confirmed that TANAP's cost significantly decreased thanks to falling oil prices and good management. He noted that the projected investment cost was $11.7 billion while the realization of the investment stood at $8 billion.

BOTAS is an investing shareholder in TANAP as well as gas recipient from gas producers in the Shah Deniz-2 field. Turkish Petroleum also has a 19 percent share in both Shah Deniz-1 and Shah Deniz-2 oil production fields, Aliyev said.

"TANAP's current 16 billion cubic meters of gas delivery capacity can be increased to 31 billion cubic meters. We are currently working on our other offshore gas production fields but this does not mean that the project will deliver only Azeri gas. We can include gas from other sources like Iran or Iraq. This is a strategic project," Aliyev noted.

The 1,850-kilometer-long TANAP is the largest section of the 3,500-kilometer-long Southern Gas Corridor, which was officially inaugurated on May 29 during a ceremony held in Baku with the participation of Azerbaijan President Ilham Aliyev.

SOCAR Turkey's investments of $14.5 billion will be realized within 2018. He said these include $8 billion for the TANAP and the company's STAR Oil Refinery, the second biggest investment, is due for an October launch in the Aegean region of Izmir.

The $6.3 billion investment in the STAR Refinery is expected to narrow Turkey's current account deficit by $1.5 billion by alleviating raw material imports, including diesel.