$2.15 billion in external finance secured for TANAP

Published 15.02.2017 00:00

Funding worth $2.15 billion in external financing for the Trans Anatolian Natural Gas Pipeline (TANAP) project, which will transport Azerbaijani gas to Europe via Turkey and is estimated to cost $8.5 billion, has been secured. Additional financing of approximately $1.5 billion from the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) is expected to be approved for the project in the upcoming period.

According to information compiled by Anadolu Agency (AA) from international financial institutions, three separate financing projects for TANAP, which is 65 percent complete, has been approved.

A total of $800 million in financing agreements has been signed with the International Bank for Reconstruction and Development, a member of the World Bank Group, for TANAP. While $400 million of the said financing was provided to Turkey's Pipeline and Petroleum Transportation Company (BOTAŞ), one of the partners of the project, the other $400 million was allocated to the South Gas Corridor Inc. (SGC), the biggest shareholder of the project.

In addition, $600 million in financing was approved for the SGC by the Asian Infrastructure Investment Bank (AIIB), which was co-founded by Turkey in an initiative led by China.

A guarantee of $750 million for the loans that the SGC will receive from other financial institutions has been provided by the Multilateral Investment Guarantee Agency (MIGA), another member of the World Bank Group. Thus, the total amount of foreign financing already secured for TANAP has reached $2.15 billion. Some 1 billion euros in financing from the EIB will be provided to BOTAS under the guarantee of the Undersecretariat of the Treasury.

Meanwhile, the EBRD has not fully clarified the amount of financing planned for the SGC project; however, a $500 million loan is expected to be approved. Talks on financing with both banks are still underway. When the EIB and EBRD's loans are approved, TANAP will receive additional external finance of about $1.5 billion. Thus, $3.7 billion in loans will be provided to TANAP, which is estimated to cost $8.5 billion.

Around 65 percent of the physical progress has been achieved at TANAP, which will be 1,850 kilometers long. The first gas from the pipeline is scheduled to be delivered to Turkey in mid-2018.

While 2 billion cubic meters of natural gas will be provided from TANAP to Turkey in the first stage, the amount will increase by 2 billion cubic meters every year, reaching 6 billion cubic meters in total.

The first natural gas delivery to Europe is planned for mid-2020. The natural gas capacity of TANAP, which currently stands at 16 billion cubic meters, can be increased up to 31 billion cubic meters in parallel with the development of the gas fields in Azerbaijan.

SGC has 58 percent stake in TANAP, while BOTAS and BP hold 30 and 12 percent, respectively. 51 percent of the SGC is under the control of Azerbaijan's Ministry of Economy and the remaining 49 percent is controlled by Azerbaijani national oil company SOCAR.

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