US confirms Iran sanctions waiver for Azerbaijan natural gas pipeline to Turkey, Europe

Baku, August 8, AZERTAC

The Southern Gas Corridor has received a waiver from US sanctions against Iran's energy customers, an expected win for the project, designed to transport 16 Bcm/year of Caspian natural gas to Turkey and southern Europe, according to S&P Global.

The language appeared in an executive order that President Donald Trump signed Monday.

BP had been seeking a sanctions waiver for its development of Azerbaijan's offshore Shah Deniz fields, the source of the Southern Gas Corridor's natural gas. Iran's NICO holds a 10% share in the second phase of Shah Deniz, potentially triggering US sanctions against Iran petroleum sector investment.

US energy sector sanctions being re-imposed November 4 will ban companies from the US financial system if they continue to do business with Iran. Countries that depend on Iranian oil imports are continuing to press the US government for waivers.

Trump's order contained a "natural gas project exception" that describes the Southern Gas Corridor without naming it.

The Southern Gas Corridor, one of the priority energy projects for the European Union (EU), consists of the Shah Deniz-2, South Caucasus Pipeline Expansion, Trans-Anatolian gas pipeline (TANAP) and Trans Adriatic Pipeline (TAP) projects. This pipeline chain will transport natural gas Azerbaijan's “Shah Deniz-2” field to Europe through Turkey. 3,500-kilometer-long Southern Gas Corridor, will deliver 6 billion cubic meters of Azeri gas to Turkey and 10 billion to Europe per year.

The total cost of SD2 project is currently estimated to be US$22.7 billion (US$17.8 billion spent as of the end of May 2018), SCPX project - US$4.5 billion (US$4.2 billion spent as of the end of May 2018), TANAP project - US$8.0 billion (US$5.5 billion spent as of the end of May 2018), and TAP project - EUR 4.5 billion (EUR 3.0 billion spent as of the end of May 2018). SGC CJSC’s share of total project cost till 2020 inclusive is estimated at US$11.4 billion, of which US$9.1 billion (approximately 80%) had already been invested as of the end of May 2018.”

The official opening ceremony of the Southern Gas Corridor was held in Sangachal terminal on May 29, 2018 and started pumping gas into the Southern Gas Corridor pipeline. The TANAP gas pipeline was inaugurated in the city of Eskisehir, Turkey, on June 12, 2018. The Trans Adriatic Pipeline (TAP) will be put into operation in 2020.

Currently, overall construction works on TANAP are 94.8 per cent and on TAP 74.6 per cent completed.

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