It could take longer than expected for Turkey and Azerbaijan to agree on the proposed Trans-Anatolian Pipeline (Tanap). “The mutual intention is to sign the agreements [related to Tanap] in the following months,” an official from the Turkish energy ministry told
Argus. The official could not provide a more precise deadline.
This wording is far less optimistic than the most recent deadline provided by BP senior director for international affairs Greg Saunders. Saunders on 27 March said Tanap agreements are to be signed “in the next week to two weeks”. Turkish and Azeri officials named April as the most likely deadline for signing all Tanap-related agreements.
Tanap will be governed by an intergovernmental agreement (IGA) signed by Azerbaijan, Turkey and Georgia, and by a host governmental agreement (HGA) signed by the Turkish government and Tanap shareholders. The IGA will set the legal and commercial terms for the pipeline, while the HGO is intended to reduce financial and political risks posed to investors by sudden changes in the Turkish law.
Tanap unites Azeri state-owned Socar (80pc), and Turkey's state-controlled Botas and TPAO, which share 20pc between them. Socar plans to reduce its stake in favour of BP, Norway's Statoil and Total, although the Azeri firm will keep a controlling stake. The precise Tanap shareholders' structure will be determined after the IGA is signed, according to Socar chief executive Rovnag Andullayev.
The delay in signing the agreements appears to stem from disagreements over control of the pipeline, the appropriate legal framework, and even the eventual capacity of the conduit — the last of which the Turkish energy ministry confirms is yet to be settled.
Tanap's capacity could be around 60bn m³/yr with a potential for further expansion, Abdullayev said. But BP's president in Azerbaijan, Rashid Javanshir,has said the transit line would only be able to reach maximum capacity of 24bn m³/yr.
Abdullayev's statement is more in line with the European Commission's line on the transit pipeline. The commission said Tanap should be designed to ship not only Azeri gas, but also Turkmen and Iraqi gas. Javanshir's statement reflects the opinion of leading Shakh Deniz shareholders who want to enter Tanap. BP, Statoil and Total have gas projects in Azerbaijan outside of Shakh Deniz. The 24bn m³/yr includes 16bn m³/yr to be produced from Shakh Deniz phase two and another 8bn m³/yr to be produced from other Azeri projects.
BP, Statoil and Total have no upstream gas projects in Turkmenistan and Iraq, which gives little incentive for these firms to make extra investments to ship gas from these countries.