The German government will lend €1.2bn to help Azerbaijan finance its part of the Southern Gas Corridor project. The funds will be allocated to the Closed Joint Stock Company Southern Gas Corridor (CJSC) and the money will be used to refinance CJSC’s stake in Shah Deniz and Turkey’s TANAP gas pipeline. The German company Uniper (E.ON) expects to receive 1.45 bcm/year through the Southern Corridor between 2020 and 2044.
The Southern Corridor includes the South Caucasus Pipeline (SCP, running through Azerbaijan and Georgia), the Trans-Anatolian Natural Gas Pipeline (TANAP, running through Turkey), and the Trans-Adriatic Pipeline (TAP, running through Greece, Albania and Italy).
In October 2017, the European Bank for Reconstruction and Development (EBRD) approved a US$500m (€402m) loan for the TANAP project, which will be operated by the Azerbaijan state-run company SOCAR, with a 58% stake. TANAP broke ground in March 2015 and will be commissioned in stages: the first phase, connecting the Shah Deniz II field in the Caspian Sea (Azerbaijan) to the Turkish transmission network is expected to be commissioned in mid-2018 with an initial capacity of 16 bcm/year; of this amount, 6 bcm/year will be sold in Turkey and the remaining 10 bcm/year will be transited to European markets. The capacity of the pipeline should rise to 23 bcm/year by 2023 and to 31 bcm/year in 2026, with 21 bcm/year for Turkey.