Focus on TAP’s contribution to South Eastern Europe and the Balkan region

Current discussions on the Southern Gas Corridor tend to overlook one of the European regions which will benefit from it the most: South Eastern Europe. Countries throughout this region depend heavily on Russian gas imports. For example, Bosnia and the Former Yugoslav Republic of Macedonia rely on Russia for 100% of all domestic demand, Serbia for 88%, and Croatia 39%.

But dependency on a single supplier is only one of the region’s challenges. Other countries such as Albania, Montenegro and Kosovo are not yet connected to the gas grid and are entirely reliant on oil and coal as their primary energy sources.

In addition, South Eastern Europe’s strong economic growth (around 5% GDP increase yearly) is generating even higher energy demand.  Coupled with the region’s collective aspiration to EU membership, this means that it will not only need more energy supplies but a more environmentally balanced energy portfolio, too.

Enter the Trans Adriatic Pipeline, the only planned pipeline in the Southern Gas Corridor with the potential to bring Azeri natural gas into the region. Dr. Lutz Landwehr, TAP’s Strategy and Management Support Manager, explains:  “TAP can significantly reduce the reliance of South Eastern Europe on the current single source supplier by bringing new gas supplies from the Caspian. In addition, TAP is designed to allow up to 8 bcm of physical reverse flow and is evaluating the option to develop underground storage in Albania. These are two features which can significantly enhance security of supply in the region.”

The natural gas reverse flow feature can be rapidly activated in the case of emergency and meets the EU requirements set out in Regulation (EU) No. 994/2010 concerning measures to safeguard security of gas supply. It will also enable the region to connect to new gas sources such as those in northern Africa as well as to other more diverse sources such as the partially liquid gas market in Italy.

A third and equally attractive opportunity is the ability to connect to several pipeline systems in the region. “TAP can be seen as an integrated part of the Western Balkan Energy Ring which is proposed by the Energy Community," said Dr. Landwehr. “This is significant because it means that we will be able to accommodate gas supplies into the wider Balkan region.”

To demonstrate its commitment to the region, TAP recently signed two Memoranda of Understanding and Cooperation with the Croatian and Bosnian system operators, Plinacro and BH-Gas, who both promote the Ionian Adriatic Pipeline (IAP). Starting at a tie-in point to TAP in Albania, the IAP aims to deliver gas to northern Albania, Montenegro, Bosnia and Herzegovina, and Croatia.

“These agreements provide a framework for technical cooperation, alignment of the pipelines’ schedules, and to gather political support for both projects,” said Cecilia Wagner, TAP’s Senior Business Development and Permitting Advisor.

“National authorities and communities are enthusiastic about the potential for TAP to bring new energy resources to the region,” she added. “The most important effort now is ensuring the policy framework that will support infrastructure development and private investment in the region.”

Ultimately, ensuring gas supply in South Eastern Europe will promote economic development and political stability. “This is particularly important given that these are countries aspiring to join the EU in the next ten years,” added Dr. Landwehr.

Not only can TAP meet the strategic objective of the diversification of energy supply within the entire EU and specifically in the wider Balkan region; it is also a commercial project, independent of public funding, that will not burden the EU or the host countries. “Delivering the EU’s objectives at no cost – while meeting the needs of South Eastern Europe – should be a big incentive when it comes to deciding on the best pipeline project for the region,” Wagner concluded.

This article was published in May 2011 in TAP's newsletter, Issue 5 >>