Trans Adriatic Pipeline secures $4.5 billion financing deal

The Trans Adriatic Pipeline (TAP) secured project financing worth EUR 3.9 billion ($4.47 billion) in December 2018 making it the largest financing agreement for a European infrastructure project in 2018.

TAP, an 878 km long pipeline, will carry natural gas from the giant Shah Deniz II offshore field in Azerbaijan to Europe.

It was connected with TANAP pipeline at the Turkish-Greek border at Kipoi in November 2018. It then crosses Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

Once operational, the Southern Gas Corridor will offer a new source of competitively priced gas for the European Union energy market. The new energy link will increase diversity and security of supply especially in Southern Europe, currently reliant on a single supplier. TAP is recognized as a European Union Project of Common Interest (PCI).

First gas to Georgia and Turkey is now being delivered, first deliveries to Europe will follow in 2020.

Luca Schieppati, TAP’s managing director, said: “With the financial close now achieved, TAP has reached another major milestone of the project’s progress. TAP has voluntarily committed to comply with environmental and social standards required by the international financial institutions.

“As such, all necessary assessments to substantiate this commitment have been undertaken and met by TAP. This also included a thorough environmental and social assessment. With project financing now concluded, TAP can progress to the final completion of the project and delivery of Shah Deniz II gas in 2020.”

Source: TAP

The financing is provided by a group of 17 commercial banks, alongside the EBRD and the European Investment Bank (EIB). Part of the financing is covered by the export credit agencies – BPIFrance, Euler Hermes and Sace.

Andrew McDowell, European Investment Bank VP responsible for energy, added: “As the EU Bank, the European Investment Bank recognizes the important contribution to improving security of energy supply in Europe that the Trans Adriatic Pipeline will bring and has provided EUR 700 million for this, the largest energy project in Europe currently being built.

“The EIB is pleased to have been an anchor lender to the project, alongside the EBRD and other leading financial institutions, to successfully finance this complex and ambitious project and welcomes the continued close cooperation between all project partners to ensure that environmental, social and technical best practice is followed.”

The project raised EUR 3.76 billion in third-party senior debt with a door-to-door tenor of 16.5 years, combining commercial debt along with development financial institutions and export credit agencies.

Costs have previously been funded in full by TAP’s shareholders: BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%), and Axpo (5%).

Nandita Parshad, EBRD Managing Director Sustainable Infrastructure, stated: “TAP will set the foundation for an integrated gas market across south-eastern Europe and enhance the region’s strategic status as an energy hub. We believe that gas remains an important transition fuel in this region that can help displace coal and facilitate penetration of renewables.”

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