TAP pipeline on course for first gas to Italy in early 2020

By Stephen Jewkes

MILAN (Reuters) - The Trans Adriatic Pipeline (TAP) taking gas from Azerbaijan to Europe will pump the first gas into Italy at the start of 2020 despite local protests against the 4.5 billion euro ($5.3 billion) project, the TAP president told Reuters.

"We are on track to deliver the gas in the first quarter of 2020," Walter Peeraer said in an interview.

TAP, the end piece of the $40 billion Southern Gas Corridor, is slated to bring up to 10 billion cubic metres of gas from the giant Azeri Shah Deniz II field into the small Italian seaside town of San Foca in the southern Apulia region by 2020.

But opposition from the local town council and the regional authority, as well as ongoing clashes between no-TAP protesters and police, has caused delays and raised concerns the project could miss deadlines and even be re-routed.

Michele Emiliano, governor of the Apulia region, has called for the pipeline to be moved further north and has filed a series of legal claims that have drawn the ire of Rome.

The Italian government, keen to transform Italy into a gas hub for southern Europe, considers TAP a strategic priority.

Puglia has around 14,000 kilometres (8,700 miles) of high/mid/low-pressure gas pipes on its territory. EDF unit Edison and Greece's Depa have plans to bring in Mediterranean gas through the EastMed pipeline to the Puglia resort of Otranto.

Peeraer said the landfall site, which had been chosen from 20 other locations for its minimal environmental impact, would not be changed. Such a move could put the project back 4-5 years, he said.

"The commitment is to transport about 8 to 10 bcm to Italian shores. Re-routing through Albania is not an option. There is no Plan B," he said.

Italy's anti-establishment 5-Star Movement, the biggest single party in opinion polls, is against the pipeline which it sees as an environmental danger and unnecessary given Italy's excess capacity.

General elections are expected in Italy in March.

TAP was cleared by European regulators in March last year as part of Europe's drive to secure energy supplies and reduce the bloc's dependence on Russian gas.

The 870-km pipeline will link the Shah Deniz II field with Italy, crossing Georgia, Turkey, Greece, Albania and the Adriatic Sea. It is the largest attempt so far to bring new supply sources to European consumers.

TAP shareholders include Azerbaijan energy group Socar, oil major BP and Italian gas group Snam.

Peeraer said capacity on the TAP pipeline would be expanded when enough customers expressed interest but added there had been no discussions yet.

"It is therefore premature to discuss if Gazprom might take capacity," he said.

Earlier this year Gazprom's deputy head Alexander Medvedev said the company was considering pumping gas through the link.

Peeraer said talks with the European Investment Bank on funding for TAP were ongoing, adding he expected a decision in February.

Reports have said the EIB could sign off on a loan of 1.5 billion euros for TAP developers at its board's meeting in February next year.

($1 = 0.8437 euros)

(Reporting by Stephen Jewkes; Editing by Adrian Croft)