Luca Schieppati: 'We are assessing degree to which TAP can transport blend of natural gas and hydrogen'

The strategic goal of the Southern Gas Corridor has been achieved with the start of commercial gas supplies from Azerbaijan to Europe through the Trans-Adriatic Pipeline (TAP). TAP, which plays a special role in Europe's energy security, will strengthen the energy security of Azerbaijan as a producer by diversifying markets, and the energy security of consumer countries by diversifying sources and routes. Supplying southern Europe with gas from a new source serves to provide consumers with energy under more favorable conditions, contributes to decarbonization, and connects the continent with the Caspian region.

Managing Director Luca Schieppati spoke to Report about TAP's activities, hydrogen transportation by pipelines, gas transmission across countries and the current situation in market challenges:

- How do you evaluate TAP's activities and future goals?

- TAP offers reliable transmission services to shippers, providing direct access to the gas markets of Greece and Italy, and indirect access to the wider region, including Bulgaria.

Shippers, our clients, have either signed Gas Transportation Agreements for long-term capacity under the market test procedures or are booking TAP’s capacity on a short-term basis. TAP is an independent Transmission Services Operator (TSO) and joint-venture company owned and run by shareholders, experienced energy companies and not by sovereign countries.

TAP enables connections to key gas transportation infrastructure, such as the Interconnector Greece Bulgaria (IGB) and, in the future, potentially, the Ionian Adriatic Pipeline (IAP). For example, through interconnection with IGB, which started its commercial operations in October 2022, TAP brings a new source of natural gas to regional markets currently depending on a single source.

- Are there first results for the second round of market test proposals from the TAP consortium? When is the decision based on the results expected to be implemented?

- TAP’s expansion capacity is offered to the market through regular market tests in an open, transparent, and non-discriminatory way. Market tests are initiated at least every odd year following the start of operations. The market tests are structured in two phases: the Non-Binding phase and the Binding Phase. The Binding bidding phase of the 2021 Market Test closed on 22 January 2023, resulting in TAP being able to trigger the first level of capacity expansion and allocating ca. 1.2 billion cubic meters per year (bcm/a) of incremental capacity through long term contracts starting from 2026.

In order to accommodate the market needs, a second Binding phase is expected to be launched during the second half of 2023. In parallel, in line with CAM NC, a new market test (the 2023 Market Test) will be launched, starting with a Non-Binding Phase in July 2023.

- What are the plans for hydrogen transport as a result of TAP's capacity expansion? Has the volume of hydrogen to be transported been determined?

-The entire industry is currently focused on hydrogen, as one of the key solutions, to eventually achieve carbon neutrality by 2050. TAP has been quick to embrace this notion from the outset. Our ambition is to develop the asset to allow transportation of hydrogen, initially in the form of a blend with natural gas. We envisage hydrogen concentrations being increased in incremental steps in line with the development of the H2 market and relevant demand, as well as the evolving regulatory framework both at EU and MSs levels.

We are in the process of assessing the degree to which TAP can technically accommodate transporting a blend of natural gas and hydrogen. In 2021, an Initial Hydrogen Readiness study confirmed that TAP has the potential to transport hydrogen blend. We will be testing our asset materials in an internationally recognised laboratory in 2023 to fully assess the suitability to meet the forthcoming hydrogen requirements and opportunities.

TAP is working closely with its shareholders, key vendors, and the industry, as the investment in the facilities upgrade and H2 percentage to be transported will likely be developed incrementally over time to match the hydrogen market demands and in line with the related market regulations.

- How much gas was transferred by TAP by country?

Of the 24.75 billion cubic meters (bcm) we have transported in total since the start of physical flows (last day of 2020), almost 1,1 bcm has reached Bulgaria, more than 2,7 bcm reached Greece and more than 20,7 bcm Italy.