EU Investment Bank approves € 1.5bn loan for Trans Adriatic Pipeline (TAP)

Gas pipeline in the European Union. (Copyright: EU, 2012 / Source: EC - Audiovisual Service / Photo: Ferenc Isza)

Gas pipeline in the European Union. (Copyright: EU, 2012 / Source: EC – Audiovisual Service / Photo: Ferenc Isza)

Last week, the European Investment Bank (EIB) approved a € 1.5 billion loan for the Trans Adriatic Pipeline (TAP), a pipeline project to ship gas from Azerbaijan to Italy via Greece and Albania. The funding is part of a € 40 billion project to bring new gas supplies to Europe, the Southern Gas Corridor, and represents EIB’s largest ever single loan to an energy project. Although the TAP is expected to bring new gas supplies to Europe and reduce dependence on Russia, opponents and advocacy groups claim that the project will have negative environmental and social impact, citing human rights abuses in Azerbaijan and growing investments in fossil fuels in the Old Continent.


The Trans Adriatic Pipeline is a planned 870km-long natural gas pipeline that will run from Greece via Albania and the Adriatic Sea to Italy, and further to Western Europe. The Southern Gas Corridor is expected to bring around 16 billion cubic metres of gas per year to Europe by 2020, from the giant Azeri Shah Deniz II field, crossing Georgia, Turkey, Greece, Albania and the Adriatic Sea.

The Trans Adriatic Pipeline is recognised by the European Commission as a Project of Common Interest (PCI) in the framework of the EU’s Trans-European Energy Infrastructure Guidelines. A decision about the loan was originally due on December 12 last year, but the Luxembourg-based EIB delayed it after the board claimed it needed more time to have look at the project more in depth. The funding that has been granted last Tuesday is part of a total € 6.5 billion financing approved by EIB for 36 projects in 17 European Union countries and schemes in Africa, Asia and Latin America.

Large investment

EIB Vice President Andrew McDowell told Reuters last week the TAP project would help to offset declining European production, provide a diversified source of gas and displace coal-fired power generation in central and South Eastern Europe. “The argument we are persuaded by, that made by the European Commission, is that it is simply not fair to leave large parts of Europe, particularly central and South Eastern Europe, at the mercy of a single supplier”, Mr. McDowell said.

Reuters also quoted Mr. McDowell as saying he hoped the EIB’s stamp of approval would smooth the way for the 4.5 billion euro pipeline to seek further financing from the market in the coming weeks. The international news agency has also revealed the European Bank for Reconstruction and Development is also expecting to decide on a loan for TAP this year, according to a spokesman. In October, it approved a $ 500 million loan for the TANAP pipeline, the central part of the Southern Gas Corridor, through which the first gas flows are expected in 2018.

Fierce opposition

But TAP has faced also big delays in the past months, due to massive public demonstrations, especially in Italy. Fierce protests took place in Apulia over the past two years as campaigners were trying to block the removal of centuries-old olive trees for the construction of the TAP’s Italian leg, even though the heads of the project are claiming the trees will be replaced in their original sites once construction is complete.

Most notably, green campaigners and activists highlighted the impact construction work is already having on local communities, from Azerbaijan to Europe, as well as the pipeline’s alleged incompatibility with the targets of the Paris climate deal. Colin Roche, extractive industries campaigner for Friends of the Earth Europe, said: “The European Investment Bank is now shamelessly locking Europe into decades of fossil fuel dependency, even as the window for fossil fuel use is slamming shut”. Xavier Sol, Director of Counter Balance, an alliance of European NGOs campaigning to prevent negative impacts of major infrastructure projects, described the EIB’s decision to fund TAP as “a historic mistake”.

Environmental management

TAP AG, the company established to plan, develop and build the TAP natural gas pipeline, has said that, the compan and its shareholders “take environmental, social and cultural heritage management, corporate social responsibility, and health and safety very seriously”. “The company complies with all legal requirements, implementing good international industry practice and the applicable lender standards”, an official corporate document said.

“Economic justification”

The EIB has officially assessed the economic justification of the project “as part of its due diligence”, and by claiming that the Southern Gas Corridor has been identified by the Council of Ministers, the European Commission, and the European Parliament as a “strategically important component within the EU’s energy policy”. “The SGC is economically justified on the basis of its contribution to security of supply and by enabling a new source of cost-competitive natural gas”, said the EIB in an official statement. “TAP is one of the largest single capital-investment projects currently being undertaken in Europe and the largest in Greece. It is expected to contribute to economic recovery in Greece and the other countries through which the pipeline is to be built”, the statement added.

TAP AG is a Switzerland-based company, headquartered in Baar, in the Canton of Zug, and has offices in Athens, Tirana, Rome, and Lecce. TAP’s shareholding is comprised of BP (20%), Azerbaijan energy group SOCAR (20%), Italy’s Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%). In early September 2017, the project leaders said that more than 50% of the pipeline construction was complete, nearly 16 months after construction had began.










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