The Vertical Gas Corridor is moving beyond its initial role as an emergency response to disruptions in Russian gas transit, evolving into a permanent north-south infrastructure network. The initiative now links transmission system operators across nine countries: Greece, Bulgaria, Romania, Moldova, Ukraine, North Macedonia, Serbia, Hungary and Slovakia.
Officials describe the expansion as part of a wider Southeast European gas strategy. Rather than focusing only on replacing disrupted supply sources, countries aim to build a more flexible regional system. The system is intended to move gas between LNG terminals, storage facilities and national markets.
The development is taking place as European gas market conditions tighten. EU storage facilities were reported at 54% capacity on 19 July, compared with 64.8% in the same period a year earlier. Working inventories were approximately 59 billion cubic metres, around 11 bcm below 2025 levels.
Market structure has added pressure for storage operators and utilities. When short-term gas prices traded above winter contracts, the incentive for storage injections weakened. Governments and utilities faced a choice between securing additional volumes at higher prices or accepting increased exposure ahead of the winter heating season.
Gas price signals in Southeast Europe during July
Southeast European market pricing reflected the tighter conditions during July. Average CEGH gas prices reached €60.65/MWh in the second half of July. Greek gas prices averaged €48.61/MWh over the same period.
Serbia reported that European gas prices rose by almost 30% since April, reaching around €65/MWh. Regulated household prices in Serbia remained unchanged during the period described. Serbia also continued relying on an oil-indexed Russian gas agreement.
Infrastructure build-out and integration requirements
Diversification efforts are progressing across the region at the infrastructure level. Croatia’s Krk LNG terminal is expected to increase annual capacity by approximately 1 bcm in 2027, expanding access to imported liquefied natural gas. Croatia and Hungary are also working on additional cross-border transmission capacity.
Vertical Gas Corridor partners are assessing technical and regulatory requirements to strengthen integration with Serbia and North Macedonia. The corridor’s effectiveness depends on both physical connections and how they are used commercially. New pipelines can become costly security assets if long-term capacity bookings remain insufficient.
Market design factors can also limit practical value from new connections. Limited reverse-flow capability, complex tariff structures or poorly coordinated capacity products could reduce how effectively flows can be arranged across borders.
Commercial rules for cross-border corridor use
The corridor’s commercial performance is linked to deeper regional market integration. This includes harmonised capacity auctions and transparent congestion management across relevant networks. Cross-border tariffs are expected to be competitive.
The approach also calls for equal access to LNG and storage infrastructure across participating markets. The aim is to support utilisation patterns that align with regional connectivity rather than isolated national supply arrangements.
Serbia’s supply security measures and storage position
Serbia is advancing measures aimed at improving supply security. These include a planned gas interconnection with Romania and increased storage availability through leased capacity in Hungary. The Banatski Dvor storage facility was reported at around 93% full.
The Banatski Dvor facility holds approximately 482 million cubic metres, according to reporting cited in the source material. Future upgrades are expected to raise withdrawal capacity to 12 million cubic metres per day.
Bosnia and Herzegovina diversification steps and pipeline funding
For Bosnia and Herzegovina, diversification remains a priority in the period described. Gazprom Export increased the third-quarter gas price paid by Energoinvest by 14.42%, reaching approximately €0.50 per cubic metre. Republika Srpska has allocated €48.5 million for the Šepak–Novi Grad gas pipeline.
Discussions continue regarding southern interconnection routes and the potential role of LNG supplies delivered through Croatia. Each diversification project faces political, financial and regulatory challenges within the region’s framework for cross-border energy infrastructure.
Gas demand outlook and flexibility for lower-carbon systems
Natural gas is expected to remain part of Southeast Europe’s energy system as coal-fired generation declines and renewable energy sources expand. Future infrastructure investment planning is expected to account for long-term changes in gas demand and stricter methane regulations.
The possibility of adapting selected assets for hydrogen and renewable gases is also part of forward-looking considerations cited in the source material. Projects highlighted as most valuable are those that improve supply security while maintaining flexibility under lower-carbon market conditions.
The long-term success of the Vertical Gas Corridor is therefore tied not only to connecting pipelines but also to creating an integrated regional gas market capable of supporting Southeast Europe’s broader energy transition.
