Efforts to transport natural gas to Ukraine via the Vertical Gas Corridor faced a setback after all three capacity auctions for January concluded without a single bidder. This outcome raises fresh doubts about the commercial readiness of the corridor and its ability to compete with alternative supply routes.
The auctions, held simultaneously, covered three distinct transport routes. These included the established route starting at the Revythoussa LNG terminal in Greece and passing through Bulgaria, Romania, and Moldova to Ukraine, a second option via the Alexandroupoli floating LNG terminal, and a third route delivering Azerbaijani gas through TAP and onward via the Greece-Bulgaria interconnector. Despite being designed to meet Ukrainian demand for January, none of the routes attracted interest. Notably, DEPA Trade, the Greek gas supplier that recently agreed with Ukraine’s Naftogaz to deliver US LNG during the winter, did not participate. In the previous December capacity tender, DEPA had booked the majority of available volumes on the main route, along with companies like DTEK and Axpo.
Market participants cite several reasons for the lack of bids. These include the short preparation time for the auctions, relatively high transit fees, muted demand from Ukraine at present, and stronger competition from other corridors, particularly those running through Poland and Lithuania.
Regulatory uncertainty also contributed. Until a few days before the auctions, approval of the new capacity products was still pending, as the European Commission reviewed complaints from traders regarding discounted transit fees granted by system operators along the Vertical Gas Corridor. While this review was ongoing, national regulators could not formally clear the new routes for auction.
Attention now turns to the next round of auctions, scheduled for 26 January, which will cover gas deliveries to Ukraine for February. Greek officials and market observers expect that by then the European Commission’s position will be clearer, potentially boosting confidence and increasing the chances of a successful auction outcome.
