EC Agrees on State Aid for TAP Gas Pipeline Project

March 4, 2016

The European Commission has decided that the agreement between Greece and the Trans Adriatic Pipeline (TAP) joint venture to build a pipeline that will bring Caspian gas to Europe is in line with EU rules for state aid.

The decision means that the implementation of the key EU energy infrastructure project aimed at diversification of Europe's gas supply sources and routes has moved one step closer to start.

“The project will improve the security and diversity of EU energy supplies without unduly distorting competition in the Single Market,” the European Comission said in a statement on Thursday.

The Commission has found that even though the agreement provides TAP with a specific tax regime for 25 years from the start of commercial operations, which may give the company an economic advantage over its competitors, such type of state aid “can be found compatible under certain conditions when it furthers objectives of common interest.”

“The Trans Adriatic Pipeline will bring new gas to the EU and increase the security of energy supply for Southeast Europe,” EUCommissioner in charge of competition policy, Margrethe Vestager, has commented, according to the statement.

“The investment incentives offered by the Greek Government are limited to what is necessary to make the project happen and in compliance with state aid rules,”Vestager added.

TAP is the European leg of the Southern Gas Corridor, which aims to connect the EU market to new gas sources. With an initial annual capacity of 10 billion cubic metres of gas, the 878-km long pipeline is projected to carry gas from the giant Shah Deniz II field in Azerbaijan to the EU market as of 2020.

TAP will connect with the Trans Anatolian Pipeline (TANAP) at Turkey's border with Greese and run about 480 km on Greek territory before crossing Albania and reaching southern Italy, under the Adriatic Sea.

The new route can facilitate gas supply to several countries of Southeastern Europe, Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, Croatia and others, TAP has said. From Italy, Caspian gas can be transported to some of the largest European markets such as Germany, France, the UK, Switzerland and Austria.

TAP plans to invest EUR 5.6 B over five years in the project, including EUR 2.3 B in Greece. The project will be funded entirely by private investment and will generate revenues in its Greek part only from the tariffs paid by clients shipping gas on the pipeline.

Switzerland-registered TAP is a joint venture company,in which BP, SOCAR and Snam have stakes of 20% each.Fluxys has a share of 19%, Enagás - 16% and Axpo - 5%.

The Trans Adriatic Pipeline is recognised as a project of common interest under the EU's Trans-European energy infrastructure guidelines, which are aimed at helping create an integrated EU energy market.

Copyright 2016. Novinite