The European Bank for Reconstruction and Development (EBRD) approved an up to 500 million euro loan yesterday for the construction of the Trans Adriatic Pipeline (TAP), the bank said in a statement.

The 878-kilometer pipeline will start at the Turkish-Greek border, cross Albania and, after passing under the Adriatic Sea, end in southern Italy. It constitutes the final leg of the Southern Gas Corridor (SGC) and will transport gas from the Caspian region to Europe.

The 4.5 billion euro TAP project is the final leg of the $40 billion SGC set to transport gas from central Asia to Western Europe by 2020.

"With an initial annual capacity of 10 billion cubic meters - equivalent to the energy consumption of approximately 7 million households in Europe - the pipeline will make a significant contribution to the diversification of Europe's energy supply," the statement read.

The European investment bank's board earlier this year approved TAP's eligibility for a 1.5 billion euro loan, and further contributions from the export credit agencies of France, Germany and Italy are currently under consideration, the statement added. At the start point in Turkey, TAP will connect to the Trans-Anatolian Pipeline (TANAP), for which the EBRD approved a 500 million euro loan last October. At the endpoint in Italy, TAP will connect to the Italian natural gas network and from there with wider European networks. The bank said the SGC value chain has a total estimated cost of $40 billion and includes gas infrastructure investments in a 3,500-kilometer network of pipelines crossing six countries. "The key components are the Shah Deniz offshore gas field in Azerbaijan, the Southern Caucasus Pipeline in Azerbaijan and Georgia, TANAP in Turkey and TAP," it added.

TANAP started operations in June at a grand inauguration ceremony in Turkey's Eskişehir. President Recep Tayyip Erdoğan, Azerbaijan President İlham Aliyev and a number of other officials were present at the event along with energy ministers and the project's partner representatives.