BP Predicts TANAP Gas Pipeline Project Deal Within Two Months

Oil major also plans for June plant maintenance shutdown in June, briefly boosting Brent futures

BP plc (BP) says that it is expected to sign the Trans-Anatolian Natural Gas Pipeline (TANAP) project within a few months. The Country Manager of BP in Georgia, made the announcement on the sidelines of Georgian Oil, Gas, Energy, and Infrastructure conference held in the Georgian capital, Tblisi. He states that the company has signed all the necessary documents, with the final deal to be signed with government authorities, once the project receives its agreement from officials of all governments partaking in the project.

The company is seeking a 12% stake in the joint venture along with other oil and gas companies, such as Azeri firm SOCAR that holds a 58% stake, and Turkish firm, Botas, that has raised its stake from 20 to 30%. The TANAP Gas Pipeline project is a part of an effort by the European Union as well as Western allied governments in Central Asia, including Armenia and Georgia, to reduce their dependence of Russian gas. This gas is being used as a tool by the Kremlin government to influence European countries from issues ranging from the current conflict in Ukraine to the Iranian nuclear sanctions, all in the in the name of gas pricing issue. These endeavors, one way or the other, are entirely politically motivated.

TANAP envisages carrying 16 billion cubic meters of gas a year from Azerbaijan’s Shah Deniz ‘II’ field, which is one of the world’s largest fields. It will run from the Turkish-Georgian border to the Bulgarian Greece border, where the gas will then be injected to the system before being distributed to the entire EU bypassing Ukraine. The estimated cost arising from this ambitious gas pipeline project ranges between $10-11 billion.

Country Manager of BP says that the company is closely pacing on track in regards to the implementation of the project, though he stated that low crude oil prices is forcing them to tighten their belts, but they do not intend to back out from this venture. He refused to step back from the project since it is a long-term commitment and part of Europe’s energy security plan.

For the year 2015, the venture will invest about $6 billion on the Shah Deniz II and the South Caucasus Pipeline Expansion project, which is a part of the TANAP gas pipeline. Construction commenced few weeks ago, which is expected to be completed by 2018. However, gas deliveries from the Shah Deniz II field will not be injected into the system until 2019 latest.

Meanwhile, BP is proceeding ahead of its maintenance shutdown of its Sollom Voe oil terminal, located in one of the North Sea crude streams, in the second half of June. Brent Crude Futures briefly rose on the news, whereas BP stocks ended on $40.25 last week based on news of deal and planned shutdown.