Transportation of Turkmen gas to European markets - Trans-Caspian Gas Pipeline and White Stream 2017, October

Georgia’s as an energy bridge Georgia has been a reliable transit partner country for many years. We host successful transit projects - BTC, SCP and WREP and ongoing SCPX project intended for the delivery of Caspian Sea riches westward. Having important advantages for serving as the energy bridge Georgia has an intention to enforce its transit position even further by facilitating the implementation of pipeline projects necessary for transporting Turkmen gas to Europe and Turkey and thus contribute to the enhanced competition and energy security in the EU and Energy Community markets.

Trans-Caspian pipeline The project received PCI status in 2013 and 2015. In May, 2015 Ashgabat Declaration between the EU, Turkey, Azerbaijan and Turkmenistan was signed supporting the development of the Trans-Caspian gas pipeline. Georgia is involved in the working group meetings under this format. Promoter company – “W-Stream Caspian Pipeline Company Ltd”. In march, 2017 under the GoG’s decision the GOGC purchased 10% of shares in the promoter company. In June, 2017 financial assistance was allocated by the GoG for preparing the project for PCI selection process and grant submission. The project is included in draft 2017 list of PCIs. Good basis has been laid at Georgia-Turkmenistan Intergovernmental Economic cooperation committee where the parties agreed to cooperate on gas transit projects among other issues, exchange relevant information and studies and organize meetings at expert and ministries’ level including international forums in the gas field. In June, 2017 financial assistance was allocated by the GoG for preparing the project for PCI selection process, as well as for preparing applications for EU co-financing of studies under the CEF scheme. Two proposal for studies, including the sea-bed survey and FEED (totaling to ~Euro 11 million) was submitted on October 11th 2017).

The Trans-Caspian Pipeline (TCP) The 1st String of the TCP as the "upstream" pipeline of the expanded SCP in Georgia and further on the TAP/TANAP system aims at improving the security and diversity of the EU’s energy supply by bringing natural gas from the Caspian region and Central Asia to Europe through a new route. SCPFX provides additional security of supply from Caspian region, through e.g. appropriate diversification of supply sources. The Trans-Caspian 2nd String as the "upstream" pipeline of the expanded SCP in Georgia and further on White Stream Pipeline will transport Turkmen gas directly to Romania and other EU Member States. From receiving terminal in Constanta gas can flow through existing infrastructure in Ukraine, Slovakia and Czech Republic to Germany and surrounding countries. Some volumes can be fed into the new infrastructure to be implemented (BRUA).

White Stream In 2007  the European Commission identified the project as the 'Project of Common Interest' and further flagged as a 'Priority Project' . The Government of Georgia signed a Memorandum of Understanding with “White Stream” in March 2009. The company developing the White Stream project had received co-funding under EU's TEN-E programme to carry out the study –”Technical and economic study on the supply of Caspian gas to EU markets including Romania, Slovakia, Poland and Lithuania via Crimea, Ukraine”. In 2011 and 2013 White Stream was included in the renewed list of key selected energy infrastructure projects designated as a ‘Project of Common Interest’. In 2015 the project was removed from the PCI list due to the Romania’s opposition. Promoter - “White Stream Limited” was incorporated in United Kingdom 6 year ago on Wednesday 30 November 2011 having its registered office located in London. In March, 2017 under the GoG’s decision the GOGC purchased 10% of shares in the promoter company In June, 2017 financial assistance was allocated by the GoG for preparing the project for PCI selection process.

White Stream White Stream - the new cross-Black Sea infrastructure - will transport Turkmen gas received via the second string of the Trans-Caspian (TCP) and expanded SCP in Georgia, directly to Romania and other EU Member States. Each string of the pipeline will be able to transport 15-16 bcm/y. From receiving terminal in Constanta gas can flow through existing infrastructure in Ukraine, Slovakia and Czech Republic to Germany and surrounding countries. Some volumes can be fed into the new infrastructure to be implemented (BRUA). After branching-off near Vale (Georgia) from expanded SCP, White Stream will reach the Compressor Station on the Georgia Black Sea coast (terrestrial part 125 km) near Supsa. Such arrangement allows a fast track development via the maximal use of the pipeline infrastructure that already exists or is being constructed (Turkmen East-West, SCP, Trans-Balkan Pipeline and Bratstvo pipeline systems via Ukraine, BRUA).

Map of gas supply from Turkmenistan via TCP and WS

Objective: completion of the preparatory phase for achieving FID stage of readiness for both TCP and WS – important deadline by the end of 2019 Including: Necessary on-shore and off-shore construction permits including approved ESIA by relevant countries, preceding Sea-bed exploration leading to FEED and more precise cost estimation at a bankable level of accuracy. Sea-bed exploration and FEED are relatively expensive prerequisite for the FID, that need to be completed by the promoter companies by the end of 2019. It implies valid permitted packages both for the TCP and WS. This will stimulate the execution of the first string of the Trans-Caspian pipeline to start supplying gas into TANAP/TAP system by the end of 2020. Preparation of preliminary sale-purchase agreements, based on advance of the permitting process between Turkmenistan and interested buyers (including purchase agreement by Georgia). Preparation of necessary HGA/IGAs including the bottlenecking of the 30 bcm/y legal cap for crossing Georgia’s territory

The overall investment program of activities leading to the FID stage of readiness for the TCP and WS – completion: December 2019 (requires adjustment of the schedule due to the delay)

Beneficial cost/benefit ratio TCP and WS projects in conjunction with TANAP/TAP systems meet Criteria as per Article 4(2) of the 347/2013: Competition Market Integration Security of Supply Diversification In addition, the implementation of these projects will increase transit capability of three Eastern Partners ( Azerbaijan, Georgia and Ukraine) and strengthen security of Supply in the last two countries.

Conclusions: The TCP and WS of utmost significance We see them as complementary projects serving the expansion of transit potential of the Southern Gas Corridor. These projects will enable to transit larger gas volumes to the Europe, in particular, the White Stream will open new opportunities to reach eastern and central European countries via Romania. In the interest of the EU and three Easter Partner countries We think that the TCP and White Stream projects in conjunction with the TANAP/TAP system will greatly enhance diversification of the resources and routes for Europe and at the same time, will considerably benefit three Eastern Partner countries – Azerbaijan, Georgia and Ukraine. Thus, we consider that the conditions outlined above, make them qualified for the status of Projects of Regional Significance and respective financial assistance. Accordingly, the intensification of dialogue on these aspects is required between the parties involved.

Thank you !