Norwegian producer StatoilHydro and Swiss outfit EGL Group are poised to set up a 50:50 joint venture to develop, build and operate the Trans Adriatic Pipeline (TAP), which will bring natural gas from the Caspian Sea to Europe.
The pair will sign the deal tomorrow.
The 520-kilometre pipeline will transport gas via Greece and Albania and across the Adriatic Sea to Italy’s southern Puglia region. From there, it will extend into western Europe.
The link will be able to carry about 10 billion cubic metres of gas per annum, with the option to expand to 20 billion cubic metres. TAP is expected to be operational at the earliest from 2011, depending on the gas shipment needs.
StatoilHydro said the project is subject to a final investment decision planned for the second half of next year.
EGL, which started the project, estimates the pipeline will cost about €1.5 billion ($2.17 billion), dependent on international steel prices and other pipeline equipment-related costs.
StatoilHydro executive Rune Bjornson said: “We are pleased to join EGL in the effort of offering a new outlet for gas transported from Asia to Europe. We aim to add value to the TAP project by combining our market competence with a strong track-record in developing and building gas pipelines.
“Our joining of the TAP project should be viewed as a move to offer an attractive market outlet for the Shah Deniz gas to the European market,” he added.
StatoilHydro has a 25% stake in Shah Deniz, which lies in teh Azeribaijan sector of the Caspian.
Shah Deniz came on stream in 2006 and a second stage of development is in train after further reserves were found at the field.
The TAP project also includes the option to develop natural gas storage facilities and a liquefied natural gas terminal in Albania.
TAP is currently in the front-end engineering stage. The feasibility study was concluded by EGL in March 2006. TAP's extended basic engineering, including the environmental impact assessment finished in March last year, and included the offshore survey for the pipeline, which was carried out in 2006.