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Snam Considers Stake of up to 20 pct in TAP Pipeline Project

Italian gas infrastructure company Snam could take a stake of up to 20 percent in the project to build the Trans Adriatic Pipeline (TAP) that will carry gas from Azerbaijan to Europe, its chief executive said.

CEO Carlo Malacarne said that as gas buyers are signing binding, long-term ship-or-pay contracts for the Azeri gas, the transmission revenue is guaranteed and this opened the way for regulated infrastructure players like Snam to enter the project.

"We are ready to evaluate buying up to 20 percent of the project," Malacarne told Reuters at the Paris World Gas Conference.

TAP's current shareholders are BP (20 percent), the State Oil Company of the Azerbaijan Republic (SOCAR) (20 percent), Norway's Statoil (20 percent), Belgium's Fluxys (19 percent), Spain's Enagas (16 percent) and Swiss company Axpo (5 percent).

Snam has an alliance with gas pipeline operator Fluxys to build a trans-European gas network.

Malacarne said that some companies such as BP and Statoil might not have a strong interest in remaining in the consortium as the project matures.

"We imagine that in coming months there will be exit possibilities for this type of companies, which are production companies, not infrastructure companies," Malacarne said.

He declined to comment on the price, but insiders say a 20 percent TAP stake could be valued at around 400 million euros.

Malacarne said ship-or-pay contracts of up to 20 years make the TAP project attractive for Snam, which is analysing the possibility of participating.

"It could be an opportunity because the risk profile is very similar to our regulated risk profile."

Malacarne said Snam would make a similar evaluation about a possible equity stake in Italian utility Enel's project to build an LNG terminal in Porto Empedocle, Sicily, but only if the Italian regulator sets new rules for the LNG plant construction business.

Snam only transports gas, it does not buy or sell gas itself, and the LNG terminal is a market-driven project not completely subject to regulated tariffs.

"We are ready to invest if new rules are set by the regulators to cover the commodity risk in LNG," Malacarne said.

Many LNG terminals in Europe are underutilised because more and more LNG gas is shipped to Asia, where prices are up to two or three times higher than in Europe.

The TAP and the LNG terminal are strategic infrastructure projects for Italy, wich is seeking to diversify its energy sources. Work on the TAP pipeline is to start before mid-May 2016 and is to be completed before the end of 2020

Source: Reuters

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