The Vertical Gas Corridor, designed to connect the Alexandroupoli LNG terminal with Ukraine, is under scrutiny as stakeholders prepare for a significant LNG transport capacity auction. Scheduled for February, this auction is pivotal in assessing the corridor’s commercial viability, especially following the disappointing results of the December auction, which saw no bidders. The outcome of this tender is crucial for maintaining confidence in a project deemed strategically important by Greece and supported by the United States.
Concerns are mounting among stakeholders regarding potential regulatory hurdles that could hinder participation. The proposed transport routes, identified as Route 1, Route 2, and Route 3, are currently facing scrutiny over their compliance with EU regulations. These routes include pathways through the Revythoussa LNG terminal, the Alexandroupoli FSRU, and connections via the Trans-Adriatic Pipeline (TAP) at Komotini. The lack of clarity surrounding these regulations has left potential market participants hesitant to engage.
The demand landscape adds another layer of complexity to the auction. Ukraine’s need for imported gas remains relatively low due to ongoing damage to its energy infrastructure from Russian attacks, which has led to reduced consumption levels. Consequently, Ukraine is focusing on securing cheaper and more efficient supply routes, primarily sourcing gas through neighboring countries like Hungary and Poland, which offer logistical advantages.
Competition among suppliers is intensifying as regional capabilities expand. Notably, Poland’s transmission system operator, Gaz-System, has recently enhanced its export capacity to Ukraine by upgrading the Hermanowice station. This improvement will increase hourly export capacity from 600,000 to 720,000 cubic meters, reinforcing Poland’s role as a critical supplier in the region.
<pIn light of these developments, previously announced agreements have encountered delays. A memorandum of intent signed in November between Greek DEPA and Ukrainian Naftogaz, which was intended to facilitate gas deliveries during the January–March period, has not yet been activated. The implementation was expected through the Atlantic-See LNG Trade platform, but prevailing market conditions have stalled progress.
The upcoming auction represents a key moment for the Vertical Gas Corridor amid an evolving energy landscape marked by regulatory uncertainties and fluctuating demand dynamics. Stakeholders will be closely monitoring developments as they seek to navigate these challenges and establish a viable path forward for gas supply to Ukraine.
