Historically, countries such as Serbia, North Macedonia, and Bosnia and Herzegovina relied on Russian gas for up to 95% of their supplies. Even Romania and Bulgaria depended on these imports to meet seasonal demand peaks. Gas was integral not just for heating but also for industrial processes, including fertilizer production and power generation. The pricing structure prior to 2022 featured long-term contracts that insulated these nations from extreme price volatility, with effective prices typically ranging between €15 and €20 per megawatt-hour (MWh).
The geopolitical landscape shifted dramatically with the exit of Russian influence from oil assets. While this move did not directly impact gas flows, it dismantled the institutional framework that had historically facilitated price stability. The transition from long-term contracts to shorter agreements linked to market hubs has resulted in increased price volatility. From 2022 to 2024, average import prices fluctuated between €35 and €55 per MWh, with winter spikes pushing costs even higher. This has led to a substantial increase in regional gas import bills, which rose from approximately €1.2 billion annually before the crisis to between €2.5 billion and €3.2 billion.
A key weakness in this new environment is the region’s inadequate storage capacity, which covers only 20% to 25% of annual consumption—far below the 35% to 45% seen in Central Europe. This shortfall translates into financial strain as utilities are compelled to purchase gas closer to consumption periods when prices peak. The absence of sufficient storage not only raises operational expenditures but also impacts electricity tariffs and district heating costs.
The shift towards a trader-driven market model has further complicated matters. International trading houses now dominate the gas sector, profiting from market volatility rather than stabilizing it. This creates a disadvantage for Southeast European buyers who face fragmented demand and limited negotiating power, resulting in higher procurement costs estimated at an additional €10 to €15 per MWh compared to pre-crisis levels.
As Southeast Europe navigates its energy transition, reliance on gas-fired power generation is becoming increasingly precarious due to volatile fuel costs and carbon pricing pressures. New projects face high capital expenditures (CAPEX) ranging from €700 to €900 per kilowatt (kW), with economic viability heavily dependent on stable gas prices.
Industries reliant on gas are experiencing significant operational challenges as OPEX increases by 20% to 60%, jeopardizing competitiveness and potentially leading to de-industrialization risks. With limited capacity to pass increased costs downstream, sectors such as fertilizers and chemicals are especially vulnerable.
Looking ahead towards 2030, the region’s gas market is unlikely to revert to its previous equilibrium. Even optimistic forecasts suggest that while Russian gas may still be available, it will no longer serve as a stabilizing force. Instead, prices are expected to stabilize within a band of €30 to €45 per MWh under normal conditions, with persistent risks of winter spikes.
The cumulative investment needed for infrastructure improvements—including storage expansion and new generation capacity—could exceed €3 billion by the end of the decade. As a result, annual gas import bills are projected to remain above €2 billion even in favorable pricing scenarios.
In this evolving landscape, international traders and LNG portfolio holders stand to gain significantly while state utilities and consumers bear the brunt of rising costs. Governments must now focus on developing transparent mechanisms that can manage this volatility effectively; failure to do so could entrench gas as a permanent source of macroeconomic instability in Southeast Europe.
