Greece, partners sign off Trans-Adriatic Pipeline to widen gas supply

ATHENS, May 17 (Reuters) - Five countries in south-east Europe formally signed off on the construction of a pipeline which will transport Caspian gas to European markets in an attempt to ease their reliance on Russia.

The 870-km (540-mile) Trans-Adriatic Pipeline (TAP) is part of the so-called “Southern Corridor” that will link Azerbaijan’s giant Shah Deniz II field with Italy, crossing through Georgia, Turkey, Greece, Albania and the Adriatic Sea. It is the largest endeavour to bring new supply sources to European consumers.

“The energy map of south-east Europe is being redefined and this turns Greece into an energy hub of the region,” Greek Prime Minister Alexis Tsipras said at an inauguration ceremony in the northern Greek city of Thessaloniki on Tuesday.

The 5-billion-euro project will cross through Georgia, Turkey, Greece, Albania and the Adriatic Sea. European regulators cleared the project in March as part of Europe’s drive to secure energy supplies.

Around 10 billion cubic metres (bcm) per year of Azeri gas should reach Europe by 2020 through TAP as well as the South Caucasus Pipeline through Georgia and the Trans-Anatolian Pipeline (TANAP) through Turkey.

“We are inaugurating an important part of one of the largest and most complex projects in the history of energy industry,” said Georgian Prime Minister Georgy Kvirikashvili.

“Georgia, as a transit country, reiterates its commitment to the diversification of energy supplies to Europe.”

TAP is owned by BP, Azeri state energy firm SOCAR, Italy’s Snam, Belgian company Fluxys, Spain’s Enagas and Axpo. Construction is expected to begin this summer.

The European Bank for Reconstruction and Development is considering financing of up to 1.5 billion euros ($1.7 billion) for TAP, which would be the largest loan it has granted.

Total project costs - which include drilling, offshore platforms and terminals as well as pipelines - are $45 billion and the entire pipeline route will span 3,500 km, with TAP the final link into Europe.

Cash-strapped Greece has been seeking to boost its role as a regional energy hub and has said that TAP fitted well with another gas pipeline scheme, Interconnnector Greece-Bulgaria (IGB), and a planned liquefied natural gas (LNG) project off the northern Greek city of Alexandroupolis.

Government officials say the project is expected to create some 8,000 direct jobs in country with a record unemployment of 24 percent and will mean hundreds of millions of euros in contracts for Greek firms which will take part in construction works. (Reporting by Angeliki Koutantou; Editing by Alexander Smith)