Kjetil Tungland Talks TAP
Kjetil Tungland is the Managing Director of the Trans Adriatic Pipeline (TAP), a natural gas pipeline project that will start in Greece, cross Albania and the Adriatic Sea and come ashore in southern Italy, allowing gas to flow directly from the Caspian region to European markets.
Mr. Tungland has provided an exclusive interview to Natural Gas Europe ahead of the 2012 European Gas Conference Awards, which is taking place in Vienna this week.
What are the most important advantages of TAP compared to its competitors in the Southern Gas Corridor?
TAP has three distinct advantages over our competitors. I call them the “Three Cs”.
Firstly, there is the Concept itself: TAP is the shortest pipeline route for transporting Caspian gas to major European markets. Our chosen route allows us to double the pipeline’s capacity from 10 to 20 bcm plus on demand. This is also the most efficient use of capital and is the basis of the strong commercial proposal that we made to the Shah Deniz consortium who are developing the natural gas field in Azerbaijan.
Competence is our second clear advantage. We benefit enormously from having leading energy companies as our shareholders. Statoil is a world leader in offshore pipeline installations and natural gas infrastructure while E.ON, as one of Europe’s largest utilities, has the lead onshore, having constructed thousands of kilometers of pipelines that crisscross the continent. These two companies will be the technical service providers for our project, ensuring the highest quality and reliability of both construction and operation.
Capital is our third C and gives TAP tremendous financial strength. We are backed by shareholders who are very strong financially, with a total market value of more than €100 billion. Being privately financed, TAP will be in no need of any grants or subsidies from governments.
I feel confident that these Three Cs make TAP really stand out from the competition as the best possible solution to bring SD gas to market.
Has the European financial and debt crisis affected TAP's development at all?
No, it has not. We have a commercially viable project, backed by top-rated companies with a tremendous capital base, so the crisis has not had any negative impact on us. We are carrying on with development of the project as planned and in full alignment with the Shah Deniz consortium’s timetable.
What do you think about the latest developments in the Southern Gas Corridor, in particular, about the announcement of the South Eastern European Pipeline (SEEP) and about the gas transit agreement between Azerbaijan and Turkey?
First of all, I must say that the announcement of the SEEP project was not new information for us. In fact, previously the Shah Deniz consortium discussed with us their concept of supplying South Eastern Europe through their own pipeline. So we always knew that we are competing not only with Nabucco and ITGI, but also with SEEP. In my opinion, we have a stronger proposal than the other pipeline projects. SEEP remains a concept that potentially could be realized given additional gas volumes from Azerbaijan.
The agreement between Azerbaijan and Turkey on 25th October is extremely important for all players in the Southern Gas Corridor. For us it means that the Shah Deniz consortium is now able to deliver its gas directly into the TAP system. So, it’s definitely a very positive and welcome development for us.
What is the greatest challenge for TAP?
The main and most obvious challenge is the fact that the Shah Deniz consortium has not made a final decision yet on which pipeline project it prefers for transporting its gas. We submitted our full proposal on the 1st of October last year, together with Nabucco and ITGI. Now we can only wait for the results of the consortium’s evaluation. Apart from that, we face no other major challenges - economical or technical. As soon as a decision is made, we can proceed with the next steps in TAP’s development. We are fully on schedule and will be able to start operations in time for the first gas from Shah Deniz.
How do you evaluate the current stance of the EU and the governments of the transit countries towards your project?
Recently, the EU became more neutral in its evaluation of the projects in the Southern Gas Corridor. Previously, it had been expressing a clear preference for the Nabucco project. Nowadays, I would say, the EU is principally interested in bringing Caspian gas to Europe and would support any project that is able to do that in the most economic and reliable way.
We have regular contact and productive collaboration with the governments of all transit countries including the Commission. They support all transit projects and realise that TAP’s potential to bring energy security to their own markets is enormous.
In closing, where do you see TAP in twenty years? How will this project contribute to the fulfillment of EU's energy security goals and its 2050 energy roadmap?
That’s a very interesting question! In 20 years from now, TAP will double its transportation capacity - it will be supplying 20 bcm of gas a year to Europe via the Southern Gas Corridor. Furthermore, we will be selling natural gas along the route via interconnections to markets in South Eastern Europe and the Western Balkans. TAP will help Europe achieve its goals of diversification and security of energy supply. TAP will contribute greatly to the development of gas infrastructure in South Eastern Europe and the Balkans by promoting interconnections between different pipeline systems.
Overall, it’s a great vision, and it all starts with 10 bcm from Shah Deniz.
To conclude, I’d like to say that TAP has made a really strong proposal to the Shah Deniz consortium. We hope the decision will be made very soon, so that all players in the Southern Gas Corridor can start cooperating instead of competing. Obviously, a lot of collaboration will be required to move such a complex project forward!
Kjetil Tungland (born 1959) graduated from University of Oslo, Institute of Economics, in 1985. He joined Statoil in 1986, as macro-economic analyst. In 1990, Tungland joined Statoil's Natural Gas Business and became manager of the market analysis department in 1993. From 1999 until 2003 Tungland held the position of Senior Vice President responsible for natural gas contract negotiations, marketing and development of Statoil's natural gas business in Southern and Western Europe.
In 2003 Tungland was posted to Istanbul, working as Task Force Manager responsible for the development of natural gas marketing in Turkey in partnership with Koç Holding. He later became Statoil’s country manager for Turkey. From 2005 until 2007, he was Statoil’s country manager for business development in Iraq, living and working in Amman, Jordan. Tungland was then posted to Singapore and was responsible for developing StatoilHydro’s natural gas business in Asia.
In April 2010, Tungland was appointed Managing Director of Trans Adriatic Pipeline AG, a joint venture of EGL, Statoil and E.ON Ruhrgas. He is now based at the project’s headquarters in Baar, Switzerland.