June 6, 2018 / 2:04 PM / 4 months ago

Exclusive: Italy's new government to review TAP gas pipeline

ROME (Reuters) - A plan to build the final stage of a $40 billion international gas pipeline in Italy is under review, the country’s new environment minister said, calling the project “pointless”.

FILE PHOTO: A site for the construction of a pipeline is seen in a grove of century-old olive trees in the southern Italian village of Melendugno, near Lecce, September 23, 2016. REUTERS/Giancarlo Navach/File Photo

Italy is at the end of the Southern Gas Corridor, a pipeline taking gas from central Asia to western Europe. It is a cornerstone of the European Union’s energy security policy which aims to wean the bloc off Russian gas supplies.

Environment Minister Sergio Costa, sworn in on Friday as part of a ruling coalition of anti-establishment parties, said Italy’s involvement in the Trans Adriatic Pipeline (TAP), the final stage of the 3,500-km (2,200-mile) corridor, would be reviewed along with some other major projects.

“TAP is on the table and we are looking at it as a priority ...,” said Costa, who was nominated as minister by the coalition’s biggest party, the pro-environment 5-Star Movement.

“Given (our) energy policy, given falling gas demand, that project today looks pointless,” he added in written responses to a series of questions put to him on Tuesday and Wednesday.

A review would likely create tensions between Italy and the developers of the 4.5 billion euro ($5.3 billion) TAP project, which include British oil group BP, Italy’s Snam and Spain’s Enagás.

The TAP consortium did not reply to a Reuters request for comment.

It is unclear whether the minister’s comments will translate into action. Costa said any decision on TAP’s future would also involve other ministers.

The 5-Star also has more radical environmental policies than its coalition partner, the right-wing League.

The parties have said they will form a special committee to resolve any differences between them on the “realization and completion of public works of national significance”.

The League did not immediately respond to emailed requests for a comment.

In recent years demand for gas in Italy has risen but it is still well below its peaks of a decade ago.

FILE PHOTO: Italy's Environment Minister Sergio Costa arrives for gala dinner at the Quirinal palace in Rome, Italy, June 1, 2018. REUTERS/Remo Casilli/File Photo

Italy, which imports more than 90 percent of its needs, has key gas contracts with Russia, Libya, Algeria and Holland and previous governments have sought to create a European gas hub.

GREEN FOCUS

Costa made clear the review would focus on the underlying rationale for the TAP project arriving in Italy. That is in contrast to recent public debate which has focused instead on its planned route through the country’s southern Puglia region.

Even Puglia’s governor has said it should be redirected away from a tourist area rather than scrapped. He has proposed an alternative route via a more industrial area of Puglia.

The new government’s minister for southern Italy, Barbara Lezzi, another member of 5-Star, also told Reuters on Wednesday that her party believed the pipeline represented an unnecessary environmental danger given Italy’s excess gas capacity.

The TAP consortium has said re-routing the pipeline away from Italy is not an option and that redirecting it inside Italy could delay the project by four to five years.

In recent years, red tape and grass root opposition have chased off several foreign investors seeking to build infrastructure in Italy.

Last month, Gas Natural said it had given up on a long-standing project to build a liquefied natural gas facility in northern Italy after years of slow progress.

The Southern Gas Corridor, already mostly completed, snakes its way from Azerbaijan through eastern Europe toward Italy.

It would bring up to 10 billion cubic meters of gas to Italy from Shah Deniz 2, a gas field developed by a BP-led consortium.

The Italian end is due to be completed by early 2020 and has already received national government approvals, including environmental clearance in 2014.

Costa said the review was consistent with the coalition’s energy policy, which was outlined in a published coalition accord signed by 5-Star and League ahead of taking power.

A published copy of the accord does not specifically mention the TAP project but it says the coalition would accelerate Italy’s transition to renewable energy.

The 5-Star has said it wants to phase out fossil fuels by 2050 by ramping up renewable energy production.

Additional reporting by Gavin Jones and Crispian Balmer; Writing by Stephen Jewkes; Editing by Mark Bendeich and Mark Potter

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