All those involved in the construction of the TAP have embarked on a an “information” campaign to inform Italians of the benefits that the TAP pipeline will offer to their country, and then to support the project. “Gas for the average family in Italy is 19% more expensive than in the rest of Europe. The TAP pipeline, which is expected to cover 12% of domestic demand, can help reduce this gap”, Luca Schieppati, TAP Managing Director has said.
The construction and installation of the offshore section of the TAP pipeline in the Adriatic Sea has begun in the meantime. In fact, four-fifths of the TAP project have been completed, as the head of the communications department of the TAP pipeline, Lisa Givert has stated and shortly, after a “break”, works to complete the project on Italian soil will recommence. “The timetable for the project – as it was pointed out – remains unchanged and the TAP pipeline will be ready in 2020″.
The construction of the TAP, according to Greek Minister of Environment and Energy, Giorgos Stathakis, who addressed the “Euro Asia Energy Security Forum” (26-27 October 2018) in Belgrade, is 99% completed in Greece. The new pipeline creates an alternative natural gas pipeline linking Asia with Europe, the Greek official has said, focusing on the collaborations that are taking place in the wider region of Southeast Europe and the Balkans. Construction is expected to be completed in 2020. From 2021 on, gas transportation from Azerbaijan’s Shah Deniz II to Europe, will begin.
Why Greece is the energy hub of the Italian energy security strategy in East Med
When inhabitants in Rome switch their living room lights on and industrialists in Milan power their industries, they don’t even suppose how much of this is linked to Greece and how even more this will be in future. Nor they know that the Eastern Basin of the Mediterranean is home to large Italian investments, in order to secure the next 4 decades of Italian energy supplies.
Italy is the third largest economy and second largest industry in the EU. Notwithstanding a successful switch towards renewable energy, the Country still heavily relies on energy import, especially crude oil and natural gas. According to IEA, in 2020 the daily global oil production is expected to fall to 65 million barrels/day. The amount available for export is forecasted to reach 25 million barrels/day. A quantity that is not enough to satisfy the global demand including the extra 12 million barrels/day of oil that the EU is expected to need. According to a recent study (Sousa, 2010) the Countries that would suffer much will be Italy, Greece, Spain, Portugal and Ireland.
Italy has its own production of natural gas and crude oil, plus some respectable reserves. Still, this is largely insufficient to feed the country’s basic needs and its strategic independence. Over the 80% of energy depends on import, making the Italy extremely vulnerable in terms of independency. Geographic origin of supplies clearly shows a problematic distribution, with the greatest share coming from potential crisis areas.
On 12 December 2017, an accidental explosion occurred in a compressing station – valve station in Baumgarten, Austria, 50 km northeast of Vienna, with one fatality and 21 injuries. This particular facility receives Russian natural gas via pipelines from Slovakia and transports it primarily towards Italy, and secondly towards Germany, Hungary, Slovenia and Croatia. The accident occurred during severe cold weather conditions affecting central and northern Europe. The consequences of this supply disruption, which in fact lasted less than 24 hours, were cataclysmic.
The Italian government declared a state of emergency regarding the trading and distribution of natural gas, stating as a matter of fact that had the TAP already been operational this would have been avoided. Gas prices in Italy almost doubled. At lower percentages, prices also rose in the rest of Western Europe due to the increase in demand. Prices of other energy commodities, such as Brent oil and coal, also rose, while commodity futures prices for all energy commodities were also significantly affected. Although the disruption in Austria lasted a short time, the consequences were extremely severe especially for Italy and secondarily for the other countries. In practice, the need of securing Europe’s energy supply and for alternative power sources and routes was once more highlighted.
Greece’s importance to Italy and its energy security
Greece confirms its position as strategic and preferred location for major and infrastructural investments, including the energy, logistics, communications and food industries. Almost all the main Italian energy players have significantly invested in Greece, where also the major EPC contractors have a strong market position. Italy and Greece signed an agreement at Corfu in 2017, to strengthen the collaboration in the field of energy, of EU goals and to improve the reliability of supplies of hydrocarbons and power.
Three main natural gas pipelines will pass through the Greek territory, the TAP (Trans Adriatic Pipeline), the ITGI (Interconnection Turkey-Greece-Italy) and the EastMed via Israel and Cyprus respectively, bringing natural gas to Italy. The capacity of the three pipelines together is estimated in 30 Bcm, that makes for up to the half of the Italian consumption. ITGI and EastMed will share the IGI Poseidon pipeline.
The importance of the Eastern basin will increase with ENI’s exploitation of onshore and offshore fields in Cyprus, Egypt and Lebanon, via LNG. To this purpose Italy is building and authorizing a number of regasification plants. One in Greece and others could be on the way in Cyprus, Israel and Egypt. One exploration area in the Gulf of Patra has been assigned to Edison SpA. The oil reserves in the whole area are estimated in 80 to 100 million barrels. There is, also, the interconnecting 500 MW 400 kV power line, the HDVC, which runs from Greece to Italy. The HDVC has been used to import to Italy up to 2,5 TWh per year, as a maximum balance, which equals to the 5% of the total Italian power.
*(For full description of the TAP project and it’s security read our REPORT #1: SAFEGUARDING ENERGY NETWORKS)
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