TAP completes successful Euros 3.9 billion project financing
As one of Europe’s most strategic projects, TAP successfully completed financial close in December 2018, securing Euros 3.9 billion – the largest project finance agreed for a European infrastructure project in 2018.
“With the financial close now achieved, TAP has reached another major milestone of the project’s progress. TAP has voluntarily committed to comply with environmental and social standards required by the international financial institutions. As such, all necessary assessments to substantiate this commitment have been undertaken and met by TAP. This also included a thorough environmental and social assessment. With project financing now concluded, TAP can progress to the final completion of the project and delivery of Shah Deniz II gas in 2020,” Luca Schieppati, TAP’s Managing Director, said.
“As the EU Bank, the European Investment Bank recognises the important contribution to improving security of energy supply in Europe that the Trans Adriatic Pipeline will bring and has provided EUR 700 million for this, the largest energy project in Europe currently being built. The EIB is pleased to have been an anchor lender to the project, alongside the EBRD and other leading financial institutions, to successfully finance this complex and ambitious project and welcomes the continued close cooperation between all project partners to ensure that environmental, social and technical best practice is followed,” stated Andrew McDowell, European Investment Bank Vice President responsible for energy.
“The Trans Adriatic Pipeline will set the foundation for an integrated gas market across south-eastern Europe and enhance the region’s strategic status as an energy hub. We believe that gas remains an important transition fuel in this region that can help displace coal and facilitate penetration of renewables,” Nandita Parshad, EBRD Managing Director Sustainable Infrastructure, added.
The financing is provided by a group of 17 commercial banks, alongside the EBRD and the European Investment Bank (EIB). Part of the financing is covered by the export credit agencies – Bpifrance, Euler Hermes and Sace.
The project raised EUR 3765 million in third party senior debt with a door-to-door tenor of 16.5 years, combining commercial debt along with development financial institutions (DFI) and export credit agencies (ECA) related financing:
- EIB Direct Facility, benefitting from a guarantee from the European Union under the European Fund for Strategic Investments EFSI: EUR 700 million
- EBRD A-Loan: EUR 500 million
- EBRD B-Loan: EUR 500 million funded by commercial banks
- ECA facilities, benefiting from comprehensive cover by: Bpifrance Facility, EUR 450 million Euler Hermes Facility, EUR 280 million; A SACE Facility, EUR 700 million;
- Commercial term loan facility: EUR 635 million directly provided by commercial banks without any ECA or multilateral involvement.
Costs have previously been funded in full by TAP’s shareholders: BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).
TAP was advised by Société Générale as Financial Advisor and Allen & Overy as Legal Advisor; lenders were advised by Clifford Chance.
About the Trans Adriatic Pipeline (TAP)
TAP will transport natural gas from the giant Shah Deniz II field in Azerbaijan to Europe. The 878 km long pipeline will connect with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border at Kipoi, cross Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.
TAP’s routing can facilitate gas supply to several South Eastern European countries. TAP’s landfall in Italy provides multiple opportunities for further transport of Caspian natural gas to the wider European market.
Once operational, the Southern Gas Corridor will offer a new source of competitively priced gas for the European Union energy market. The new energy link will increase diversity and security of supply especially in Southern Europe, currently reliant on a single supplier. TAP is recognised as a European Union Project of Common Interest (PCI).
TAP promotes economic development and job creation along the pipeline route; it is also a major source of foreign direct investment. With first gas to Georgia and Turkey now being delivered, first deliveries to Europe will follow in 2020.
TAP’s shareholding is comprised of BP (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).
Commercial banks participating in the financing:
- Bank of China Limited
- BNP Paribas
- CaixaBank, S.A.
- Crédit Agricole Corporate and Investment Bank
- Landesbank Hessen-Thüringen Girozentrale
- ING Bank, a branch of ING-DiBa AG
- Intesa Sanpaolo S.p.A.
- Mizuho Bank, Ltd.
- MUFG Bank, Ltd.
- Natixis, London Branch
- Siemens Bank GmbH
- Société Générale
- Standard Chartered Bank
- Sumitomo Mitsui Banking Corporation
- The Korea Development Bank
- UBI Banca S.p.A
- UniCredit Bank AG