2020 PMI® Project of the Year Winner

Fueling Change: Building One of the World's Longest Natural Gas Pipelines in Turkey Could Boost Europe's Energy Security

2020 PMI® PROJECT OF THE YEAR WINNER

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PHOTO COURTESY OF TANAP NATURAL GAS TRANSMISSION CO.

For decades, Europe has relied heavily on one nation, Russia, to supply its natural gas. Almost 40 percent of the European Union’s natural gas comes from Russia. A new pipeline could change that.

The Trans Anatolian Natural Gas Pipeline (TANAP) is the centerpiece of the Southern Gas Corridor— a series of pipelines that, when completed this year, will supply natural gas from the Caspian Sea region of Azerbaijan to Southern Europe. The 1,835-kilometer (1,140-mile) TANAP portion spans the width of Turkey, from its border with Georgia to Greece. Investors from across Europe funded the megaproject, including the European Commission.

TIMING THE LINE

Stakeholders set a firm deadline for the project. The first phase—delivery of gas to Turkey—had to be completed by mid-2018. The second phase—constructing the line to the Greek border—had to be delivered by mid-2019. With the project agreement signed at the end of 2013, and the official groundbreaking ceremony held in March 2015, the team had no time to waste.

“The biggest challenge was the project’s schedule,” says Mustafa Ayan, former project CTO and current COO, TANAP Natural Gas Transmission Co.

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TEAM PHOTO BY BRADLEY SECKER

In close collaboration with the project’s four shareholders—three state-owned companies (two from Azerbaijan, one from Turkey) and one global oil company (BP)—the TANAP team proactively secured governmental approvals so that it could get a head start on the work. That included consent for acquiring land and building camp sites for construction crews.

The scope was staggering and complexity was high. The team also needed to provide detailed environmental, health and safety reports for each site for the 20 Turkish provinces and 600 villages through which the pipeline would travel. The first third of the line, about 600 kilometers (373 miles), also crossed a mountainous region with an altitude of up to 2,760 meters (1.7 miles)—where the weather allowed construction for only 110 days of the year.

Even with an intricate planning phase, the team couldn’t wait for the final engineering design before bidding out the procurement and construction contracts. The engineering design was only half finished when the team began signing on major contractors in 2014. That required the contractors to update their bids once they received the final design.

With just three construction seasons to deliver the first phase, team members knew they couldn’t expect one contractor to deliver the entire line on time. So instead they divided the line into four sections, awarding each to a different contractor, all of whom would perform their work simultaneously.

Although this helped address the scheduling challenge, it introduced a huge management risk. “Now we had to deal with four major contractors all building the pipeline,” says Polad Rustamov, project director and current CTO, TANAP Natural Gas Transmission Co.

To manage the contractors, the TANAP team assembled a team in 2014 to provide special services such as engineering, procurement, construction and management. But the TANAP team soon realized that the new arrangement threatened to throw the project off course. It was taking up to a week for the special services team to discuss issues and get permission from TANAP before it could give instructions to any other contractor.

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From left, Mustafa Ayan, H. Saltuk Düzyol and Polad Rustamov

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The pipeline at its highest point. Top right, pipeline segments at port. Right, pipeline installation

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PHOTOS COURTESY OF TANAP NATURAL GAS TRANSMISSION CO.

In the Flow

December 2013: Shareholders launch Trans Anatolian Natural Gas Pipeline (TANAP).

May 2014: TANAP team hires external vendor to manage the contractors.

March 2015: TANAP breaks ground.

2017: First phase of construction is completed.

June 2018: TANAP delivers first gas supply to Turkey.

June 2019: Second phase is completed, with gas to be delivered to Europe after completion of a connecting pipeline from Greece to Italy.

“The [special services] team was losing time by consulting us and getting our approval before going to the contractor,” Rustamov says.

To speed up the approval process, the TANAP team brought the special services team contractor under its purview, creating a single, integrated project management team. That led to fewer meetings and more efficient decision making. “Now we all had one goal of finishing the project on time,” Rustamov says.

After consolidation, TANAP and special services team members shared the same office. And TANAP team members joined monthly meetings held at various construction sites to help with field reports.

“When you’re at the site, you can see what the team needs,” Rustamov says. For instance, when the TANAP team saw firsthand that a river crossing could pose a delay, it spoke directly with the relevant contractor about pulling in resources from a site that didn’t need them at the time. “The most important factor for success on this project was changing from a client-engineering procurement and construction management structure to an integrated project management team,” he says. “Instead of two organizational structures, we had one.”

CARROTS AND STICKS

When finished, the TANAP project’s final US$6.5- billion cost came in at an astounding US$5.2 billion under budget. Some of those cost savings came from lower-than-expected contractor bids, but others were from carefully planned cost-savings measures.

For example, the TANAP contracts included a financial penalty for contractors who didn’t meet the project milestones. Still, team members understood that penalties alone would not be enough to fully motivate the contractors. “During the project, we said, ‘Okay, we’re penalizing these contractors if they don’t meet the milestone targets, but how are we going to incentivize them so they complete the activities before the target dates?’” Rustamov says.

The solution was a bonus structure. Each contractor had three major milestones: construction, testing and mechanical completion. If it successfully met all three milestones, a contractor would earn a 3 percent bonus.

“The stick was the penalties, but the carrot was the reward if the contractors met the milestones on time,” Rustamov says.

Another way the TANAP team kept contractors on pace: reducing the scope. For instance, in 2016, one contractor couldn’t start laying pipe on time due to a lack of resources. In response, the TANAP team eased the workload by awarding 79 kilometers (49 miles) of its line to another contractor. By splitting the task, it reduced the risk of having to stop work altogether or take the contractor to court, Rustamov says.

“We developed a solution that benefited everyone, without penalizing anyone,” he says.

Everyone understood that one unfinished stretch of line would jeopardize the entire endeavor. “If you cannot complete just 20 kilometers (12 miles) of the pipeline, then you cannot complete the project,” Ayan says.

CRITICAL PATH

As one of the longest gas pipelines ever built, the project required more than 160,000 pieces of pipe. But beyond its sheer magnitude, the line also traveled through an area that was culturally diverse, archeologically rich and geographically challenging.

When planning the route’s path, the team identified over 100 new sites of archeological value. During construction, they uncovered nearly 50 more, discovering archeological finds that ranged from graves to cooking items. Where possible, the team rerouted the line to avoid these locations. But when that wasn’t possible, they engaged an archeological contractor and collaborated with museum specialists to excavate and preserve the findings. Many of these artifacts are now on display in Turkish museums.

One excavation revealed that a town believed to be around 2,000 years old was actually closer to 3,000 years old. “The findings we discovered on that site were invaluable,” Rustamov says.

Whenever the team faced potential delays stemming from cultural or environmental concerns, such as bird species migrating through the line’s sites, work didn’t stop. Instead, the team leapfrogged down the line and returned to work on the previous site when conditions allowed.

The goal went further than cause no harm. The team also wanted to improve lives. With that in mind, it awarded US$84 million for more than 1,000 local projects from school repairs to water improvements for communities impacted by the route.

“We didn’t have any resistance from the communities because we went to them and talked about the project, and we actually delivered what we promised,” Rustamov says. “That might seem like a soft aspect of project management, but it actually has a significant impact on delivering a project on time.”

In the end, the team delivered the pipeline on time and under budget. All work earned public support and met high safety, environmental, social and quality standards. “That’s not very common for megaprojects,” says H. Saltuk Düzyol, CEO, TANAP Natural Gas Transmission Co., Ankara, Turkey.

“The project’s success means a lot for Turkey,” he adds. Specifically, the TANAP project has helped make Turkey a regional gas hub, lowered its gas prices by introducing market competition, and bolstered its energy security by diversifying the source and route of its gas.

With this year’s completion of the Trans Adriatic Pipeline—which connects to TANAP and stretches from Greece to Italy—those benefits will extend all the way to Europe, Ayan says.

“As Turkey’s and Europe’s energy demands and investments grow, they will need this additional, diversified energy source,” he says. PM

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Source: TANAP, Reuters

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