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New Year´s Message from Kjetil Tungland, Managing Director of TAP

12 janar 2012

As I sat down to write my preview of 2012, I thought it would be helpful to look again at the message I wrote in January 2011. At the time I forecast that it would be “a momentous year, with critically important decisions due”. A year on and I stand by that prediction: 2011 was massively important, both for the industry and for the Trans Adriatic Pipeline.

Crucially however, the most significant of those decisions that we were awaiting, the announcement of which pipeline has won the right to transport Shah Deniz gas, is still due. Having submitted TAP´s bid to the Shah Deniz consortium on the 1st of October last year, a document of more than 1,000 pages of information, I can testify firsthand to the sheer volume of information that the consortium must assess before they can select the winning project. Clearly, this was always going to be a challenging process.

And yet, there is also a growing sense of a need for urgency. Those very momentous events of 2011 – the catastrophe at Fukushima, the Arab Spring, spiraling domestic energy prices – have made even more clear the necessity of securing Europe’s energy future. The Southern Gas Corridor can play an important part in that, but it is essential that the industry starts work as soon as possible. Whichever project is chosen, it is clear that there is still much work and planning ahead to complete the infrastructure for gas to reach Europe from the Shah Deniz field in Azerbaijan to the market in Europe.

A Year of Progress

For TAP 2011 has been a year of significant development in which the project has implemented the highest standards, whilst reaching a number of important milestones, demonstrating its impressive technical and commercial credentials: Following two years of route refinement activities, including extensive consultation with more than 2,000 stakeholders, TAP submitted its preliminary Environmental and Social Impact Assessments to each of the relevant authorities in the transit countries that it will cross. At every stage we have met the project’s strict schedule, submitting all necessary applications on time, including the Third Party Access Exemption.

Over the course of the year, TAP also signed five MoUs, most notably with the Ionian Adriatic Pipeline shareholders, solidifying our commitment to laying the foundations for gas transportation to South Eastern European countries.

Furthermore, in a clear demonstration of the project's commitment to Greece, our shareholders decided in August to extend the pipeline in the country by an additional 300 kilometres. The TAP project will commit some €1.5 billion of inward investment and create approximately 2,000 jobs in Greece. Indeed, at a time of grave financial crisis in the country, TAP will be the biggest foreign direct investment on offer in Greece in recent years.

Growing Consensus

All of this work culminated on the 1st of October, with the presentation of TAP’s 1,000 page bid to the Shah Deniz consortium. While we await a formal response, the signs are positive, not least in terms of the support we have received from political stakeholders.

On the 27th of October, TAP hosted the first South Eastern Europe Gas Forum in Brussels. In front of more than 80 participants from various governments, European institutions and businesses, Günther Oettinger, the European Commissioner for Energy stated that “the Commission is ready to support TAP and any other project developer that works to improve the network in South Eastern Europe”.

At the same event Sokol Dervishaj, the Albanian Deputy Minister for Energy, Trade and Economy, said, “TAP is the only project in the Southern Gas Corridor that will fulfill both the objectives of the EU as well as those of the Energy Community. This is the best project due to the good it can do for the region.”

Equally significantly, a number of independent studies of the Southern Gas Corridor have also begun to endorse TAP. Reports by both Wood Mackenzie and BMI have identified the project as a frontrunner, while one of Greece’s most influential think tanks, IOBE, published a detailed study which named TAP as “the most promising route”.

Looking Ahead

Ultimately of course, the decision on who will be the winner in this historic race will come down to the Shah Deniz consortium and the Shah Deniz consortium alone. However, as we begin 2012, in earnest my feeling is that TAP is better placed than ever before to win the contract to transport the gas. We have demonstrated categorically that our project is the most viable – in terms of financing, in terms of technical capability, in terms of route selection and in terms of environmental and social impact.

So, while 2011 was undoubtedly momentous, there is every reason to believe that 2012 will be even more so. Finally, I would like to thank our supporters who have played an important part in ensuring that TAP has come this far. I would also like to wish Shah Deniz the very best of luck in making their final decision in the first quarter of this year.

With best wishes for 2012,

Kjetil Tungland
Managing Director
Trans Adriatic Pipeline