World Bank approves $800 million loan for TANAP
AA photoThe World Bank’s board of directors approved loans of $400 million each for Turkey and Azerbaijan late on Dec. 20 for the Trans-Anatolian Natural Gas Pipeline (TANAP) project.
The project will transport natural gas from a gas field in Azerbaijan to Europe via Turkey with the aim of diversifying Azerbaijan’s gas export markets and improving the security of the energy supply in Turkey and Southeastern Europe.
The loans will be supplied through the World Bank’s subsidiary, the International Bank for Reconstruction and Development (IBRD), Anadolu Agency said.
Turkey’s Petroleum Pipeline Corporation (BOTAS) will receive a loan guaranteed by Turkey with a maturity of 24 years.
In Azerbaijan, the Southern Gas Corridor (SGC) closed Joint Stock Company will obtain the loan with a guarantee from Azerbaijan based on a 30-year maturity period.
The project is part of the Southern Gas Corridor Program, which, in addition to TANAP, includes the development of the Shah Deniz 2 gas field in Azerbaijan; an expansion of the South Caucasus Pipeline across Azerbaijan and Georgia to Turkey; and the Trans Adriatic Pipeline (TAP), which carries the gas through Greece and Albania and under the Adriatic Sea to Southern Italy.
A number of international financial institutions are supporting the program, including the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (ADB) and the World Bank Group (WBG).
“We are very pleased to be part of a coalition of partners supporting TANAP, a component of the transformational Southern Gas Corridor, which will bring natural gas from the Caspian Sea to Europe,” said Cyril Muller, World Bank vice president for Europe and Central Asia.
“TANAP will not only boost competitiveness and create economic opportunities for people in Azerbaijan and Turkey, it will also support regional trade, improve connectivity, and support energy security in Turkey and in Europe.”
The project will finance infrastructure investments for the TANAP Pipeline System.
At 1,850 km, TANAP accounts for over one half of the 3,500 km Southern Gas Corridor pipeline system from Azerbaijan to Italy.
TANAP will begin at Turkey’s border with Georgia, go through Turkey from east to west, and at the Greek border will connect to the TAP, which will convey the gas to European markets.
With the completion of the project, the security of Turkey’s energy supply will be improved with the addition of 6 billion cubic meters (bcm) per year.
TANAP will connect to the Turkish natural gas network in two locations, in Eskişehir and Thrace.
“The slump in global oil prices and low commodity prices also gives the TANAP project an opportunity to shrink its budget and save up to $3.2 billion. Initially, the investment budget for TANAP was estimated at $11.7 billion, but with the help of low oil prices, we reduced our budget to $8.5 billion,” TANAP General Manager Saltuk Düzyol said in an interview with journalists last week.