The ongoing development of the Vertical Gas Corridor, which connects the Alexandroupoli LNG terminal to Ukraine, is under scrutiny as stakeholders prepare for an important LNG transport capacity auction. This auction, aimed at fulfilling Ukrainian demand for gas in February, has become a focal point for assessing the corridor’s commercial potential amid heightened political and business interest.
The outcome of this auction is critical, particularly given the lack of bidders in the previous December auction. A repeat of that scenario could severely damage confidence in a project deemed essential by Greece and supported by the United States. However, the initiative faces skepticism from various factions within the European Union, complicating its prospects.
Regulatory issues loom large over the auction process, with uncertainties surrounding compliance with EU regulations for the proposed transport products, designated as Route 1, Route 2, and Route 3. These routes include options through the Revythoussa LNG terminal, the Alexandroupoli FSRU, and connections via the Trans-Adriatic Pipeline (TAP) at Komotini. Until these regulatory questions are resolved, potential participants may remain reluctant to engage.
The demand landscape adds another layer of complexity. Ukraine’s current gas import needs are relatively low due to significant damage to its energy infrastructure from ongoing Russian attacks, which has led to reduced consumption levels. Consequently, Ukraine is focusing on securing more cost-effective supply routes.
A majority of Ukrainian gas imports currently come from neighboring countries like Hungary and Poland, which offer logistical advantages over shipments through the Vertical Gas Corridor. The competitive landscape has intensified as these countries enhance their export capabilities. For instance, Poland’s Gaz-System has recently upgraded its Hermanowice station, boosting its hourly export capacity to Ukraine from 600,000 to 720,000 cubic meters, solidifying Poland’s role as a key supplier.
<pAmid these dynamics, previously announced initiatives have encountered delays. A memorandum of intent signed in November between Greek DEPA and Ukrainian Naftogaz, intended to facilitate gas deliveries during the January–March period, remains inactive. This agreement was expected to be executed via the Atlantic-See LNG Trade platform, but prevailing market conditions have hindered its progress.
