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London — The operator of the Trans-Adriatic Pipeline (TAP) said Friday it has closed its Eur3.9 billion ($4.5 billion) project financing, keeping the pipeline on schedule to flow first gas from Azerbaijan to Italy in 2020.

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TAP is the final segment of the Southern Gas Corridor -- a $40 billion initiative to provide a new supply route into Europe -- though there have been doubts about whether it would come online on schedule after regional opposition to the project.

"With project financing now concluded, TAP can progress to the final completion of the project and delivery of gas in 2020," TAP managing director Luca Schieppati said.

The financing is provided by a group of 17 commercial banks, alongside the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).

The total cost of TAP is estimated at Eur4.5 billion, with the project to be financed by a mix of debt and shareholder equity, TAP head of communications, Lisa Givert, said Friday.

TAP's shareholders are BP (20%), Azerbaijan's state-owned Socar (20%), Italian grid operator Snam (20%), Belgian TSO Fluxys (19%), Spain's Enagas (16%) and trader Axpo (5%).

The pipeline is underpinned by long-term ship-or-pay transportation agreements signed in 2013 by the buyers and shippers of gas from Shah Deniz 2, the giant field offshore Azerbaijan that provides the gas for the corridor, Givert said, with around 8.6 Bcm/year of long-term capacity to Italy booked.

The tariff mechanism for the pipeline will be made public before the start of operations, Givert said.

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Nandita Parshad, the EBRD's managing director for sustainable infrastructure, said TAP would "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."

ITALIAN COMMITMENT

There had been question marks over whether the Italian government, which came to power in May, would look to block the TAP project, with environment minister Sergio Costa at the time dismissing the pipeline as "pointless" and questioning its economic viability.

However, the government is now fully behind the project and in its latest national plan for energy and climate submitted to Brussels this week, said TAP was on track for 2020 startup.

It said TAP would supply some 8.8 Bcm/year of gas to Italy from 2020 and could supply a further 10 Bcm/year in the future.

"Gas supplies currently come mainly from countries with high geopolitical risk profiles," it said in the plan.

"To counterbalance this unfavorable situation, we have tried to diversify non-European suppliers -- Algeria, Libya, Qatar, Russia -- and we are still actively pursuing this trend," it said, pointing to future imports from

Azerbaijan and LNG from the US and Canada.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by James Leech, newsdesk@spglobal.com