EBRD board approves $500 MM loan for TANAP gas pipeline project

LONDON (Reuters) — The board of the European Bank for Reconstruction and Development (EBRD) has approved a $500 MM loan for the Trans-Anatolian Natural Gas Pipeline (TANAP), the largest part of a $40 B project to bring new gas supplies to Europe.

Photo courtesy of TANAP.

The so-called Southern Gas Corridor is expected to bring around 16 Bcm per year to Europe by 2020 from the Shah Deniz 2 field in Azerbaijan via TANAP through Turkey, the South Caucasus pipeline extension through Georgia and the Trans-Adriatic Pipeline (TAP) to Greece, Albania and Italy.

Shah Deniz 2 is one of the world's largest gas fields and is developed by a BP-led consortium.

Francis Malige, the EBRD's managing director for Eastern Europe and the Caucasus, told journalists the TANAP project will help provide a diversified source of gas and support the gasification of Balkan countries, which rely heavily on coal.

TANAP's project cost is $8.6 B. The World Bank has committed $800 MM of financing and the Asian Infrastructure Investment Bank has committed $600 MM.

The first gas flow from TANAP is scheduled for 2018. The project is progressing on time, said Eric Rasmussen, director of natural resources at the London-based EBRD.

The European Investment Bank (EIB) is also considering $2 B of financing for TANAP, but its final decision is not expected until next month, Rasmussen said.

Separately, the EBRD and the EIB are also considering loans for TAP.

"Hopefully we will go to the board (with that) by the end of Q1 next year," said Nandita Parshad, the EBRD's managing director of energy and natural resources.

An EIB decision on TAP is not expected "for a number of months", an EIB spokesman said.

Some campaign groups have criticized both banks' funding for TANAP and TAP after Azerbaijan was suspended from the Extractive Industries Transparency Initiative (EITI)—a standard for oil, gas and mineral governance—due to human rights issues.

They have said that funding the Azeri-backed project would go against the EBRD and EIB's principles.

"While we regret that the EITI and Azerbaijan have parted ways, we have our own standards of transparency and to assess the environmental benefits of the (TANAP) project," Malige said.

Azerbaijan remains committed to the principles of the EITI and has put in place its own system with an independent auditor, according to the EBRD.

"This project continues to adhere to the principles of the EITI. That is one of the reasons we are satisfied it fulfils our criteria," Malige added.

Reporting by Nina Chestney; Additional reporting by Alissa de Carbonnel in Brussels; Editing by Dale Hudson

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