Trans Adriatic Pipeline Completion Is a Milestone for Caspian-European Integration

While headlines coming out of the South Caucasus have been primarily filled by the ongoing conflict between Azerbaijan and Armenia over the occupied territory of Nagorno-Karabakh, the completion of the Trans Adriatic Pipeline (TAP) stands as a positive development for the region. On October 12, the consortium organizing the project headed by BP announced that the pipeline itself was “substantially complete,” and that it would begin transporting gas from Azerbaijan to Southern Europe in mid-November. 

Italy, the second largest gas importer in Europe and the primary market for Azerbaijani gas shipped through TAP, now relies on Russia for 44% of its gas imports and also imports from Algeria and Libya. Algeria has at times struggled to maintain its supply through Mediterranean pipelines due to increasing domestic demand and Libyan production has remained sluggish and inconsistent since the country plunged into civil war in 2011. As a result, Italy has become increasingly reliant on Russian gas imports, making it vulnerable to Russian influence.

Italy currently consumes 70.8 billion cubic meters of gas annually, meaning that TAP’s gas will considerably diversify its energy portfolio. Though the 20 billion cubic meters of Azerbaijani gas will also serve Albania, Bulgaria, and Greece, the availability of Caspian gas for the Italian market will limit exposure to Russian imports.

The benefits of TAP also have the potential to spread far beyond the project’s direct reach. The pipeline’s Italian terminal will allow for Caspian gas to join the broader European supply chain through Italy’s existing distribution network. Future projects and expansions have the potential to further expand the market for Azerbaijan’s gas. For instance, the planned Ionian Adriatic Pipeline through the Balkan coast would link up with TAP to deliver gas to Croatia, Montenegro, and Bosnia and Herzegovina. While projects like this may not make Caspian gas the primary source of energy in region, such links with TAP and the Southern Gas Corridor project will allow governments to diversify their energy consumption in a meaningful way.

Now that this infrastructure is almost completed, additional energy resources from Central Asia can be mobilized for western markets. As part of the Southern Gas Corridor, TAP provides Kazakhstan and Turkmenistan an important opportunity to link into the European energy network. Caspian gas also combines with the increased supplies of liquified natural gas (LNG), including from the United States, to help secure and diversify Europe’s energy supply, something which has already happened in the case of Turkey. Caspian gas makes up the plurality of Turkish gas imports, but imports of American LNG increased by 300% in March 2020 relative to March 2019.

Even at a time when hydrocarbon prices remain depressed, the strategic importance of the opportunities TAP provides should not be lost. Though prices are low, the need for gas is still present. It will continue to play an integral role in Europe’s energy picture in the years to come and ensuring that there is a reliable and diversified supply of it is essential to both Europe’s economy and security. With much of the continent still suffering from the pandemic, which threatens to return in full force, disruptions to the energy supply are the last thing governments need. With increasing gas imports through the TAP and the future projects that are likely to accompany it, Europe and the Caspian region are moving one step closer to the type of region connectivity that can benefit both.