A London-based bank has approved a loan of up to €500 million (£440m) for the construction of the Trans Adriatic Pipeline (TAC).

The €4.5 billion (£4bn) TAP project will be 878 kilometres long and have an initial annual capacity of 10 billion cubic metres – equivalent to the consumption of around seven million households in Europe.

Considered a priority project of the EU, it is the final leg of the $40 billion (£30bn) Southern Gas Corridor that will transport gas from the Caspian region to Europe.

The European Investment Bank for Reconstruction and Development (EBRD), which is providing the latest funding, said the pipeline will make a significant contribution to the diversification of Europe’s energy supply.

The first delivery of gas is expected by 2020.