(Bloomberg) — Europe’s glutted natural gas markets are about to get a fresh source of supply after BP Plc and its partners finished a major new pipeline from Azerbaijan into southern Europe.
The Trans Adriatic Pipeline, or TAP, project is “substantially complete” 4 1/2 years after construction started on the 878-kilometer link, the group developing the project said on Tuesday. The partners that invested 4.5 billion euros ($5.3 billion) are now preparing for commercial operations and offering capacity to buyers.
Flows from the pipeline add to pressure on Europe’s gas distribution grid, which is struggling to absorb unusually high storage levels and shipments of liquefied natural gas, said James Huckstepp, leader of a team at S&P Global Platts analyzing the industry. The link will bring an additional 8 billion cubic meters of gas per year to Italy, and 1 billion cubic meters to Greece and Bulgaria, shifting the dynamic of a market that gets much of is supplies from Russia and the North Sea.
“TAP is a bearish factor, mainly for Southern Europe,” Huckstepp said. “It will also have an indirect impact in Northwest Europe, as it will mean less gas being exported to the south.”
The pipeline starts near the Evros area of Kipoi at the Greek-Turkish border, where it is connected to the Trans Anatolian Pipeline. It traverses northern Greece and crossing Albania and the Adriatic Sea, comes ashore in Southern Italy to connect to the Italian gas network.
Trans Adriatic Pipeline AG
Completing the link is a major milestone for the European Union, which has worked for years to diversify its sources of gas supply away from Russia. While Germany is supporting Russia’s controversial Nord Stream 2 route to bring gas to the continent via the Baltic Sea, TAP as part