The Vertical Gas Corridor is increasingly moving beyond its original role as an emergency response to disrupted Russian gas transit and developing into a long-term north-south energy infrastructure network. The initiative now connects transmission system operators from nine countries: Greece, Bulgaria, Romania, Moldova, Ukraine, North Macedonia, Serbia, Hungary and Slovakia.
The expansion reflects a broader transformation of regional gas policy. Instead of focusing only on securing alternative gas supplies, Southeast Europe is increasingly building a system capable of moving energy between LNG terminals, storage facilities and national markets. The objective is to create greater flexibility, improve security of supply and reduce dependence on individual suppliers.
The timing remains challenging. EU gas storage levels were reported at 54% on 19 July, compared with 64.8% during the same period a year earlier. Working inventories stood at around 59 billion cubic metres, approximately 11 bcm below the 2025 level. A market structure where short-term gas prices exceeded winter contracts reduced incentives for storage injections, forcing governments and utilities to choose between paying higher prices for additional reserves or accepting greater exposure ahead of the heating season.
Southeast European gas markets have already reflected the tighter conditions. Average CEGH gas prices reached €60.65/MWh in the second half of July, while Greek gas prices averaged €48.61/MWh. Serbia reported that European gas prices had increased by almost 30% since April, reaching around €65/MWh, although regulated household prices remained unchanged and the country continued relying on its oil-indexed Russian gas agreement.
Physical diversification is progressing through several infrastructure projects. Croatia’s Krk LNG terminal is expected to increase annual capacity by around 1 bcm in 2027, strengthening access to imported liquefied natural gas. Croatia and Hungary have agreed to expand cross-border transmission capacity, while Vertical Gas Corridor partners are assessing the technical and regulatory steps needed to improve integration with Serbia and North Macedonia.
Serbia is also advancing new supply routes, including a planned interconnection with Romania, while increasing storage security through leased capacity in Hungary. The Banatski Dvor gas storage facility was reported to be around 93% full, containing approximately 482 million cubic metres, with future expansion expected to increase withdrawal capacity to 12 million cubic metres per day.
However, the success of the corridor will depend not only on infrastructure availability but also on commercial utilisation. New pipelines can become costly security assets if long-term capacity bookings remain limited. At the same time, insufficient reverse-flow capability, complex tariffs or poorly coordinated capacity products could prevent efficient use of existing infrastructure.
The economic value of the corridor will therefore depend on practical market integration, including harmonised capacity auctions, transparent congestion management, competitive cross-border tariffs and equal access to LNG and storage resources.
For Bosnia and Herzegovina, diversification remains particularly urgent. Gazprom Export increased the price paid by Energoinvest for third-quarter gas supplies by 14.42%, reaching approximately €0.50 per cubic metre. Republika Srpska has allocated €48.5 million for the Šepak–Novi Grad gas pipeline, while discussions continue over southern interconnection options and the potential role of LNG supplies delivered through Croatia.
Each diversification project carries political, financial and regulatory challenges, but reliance on a single supplier continues to expose domestic consumers and industry to external pricing decisions.
Gas will remain an important element of Southeast Europe’s power system as coal-fired generation declines and variable renewable sources expand. However, future infrastructure decisions must also consider long-term changes in energy demand, stricter methane regulations and the possibility of converting selected assets for hydrogen or renewable gases.
The most valuable projects will be those that improve immediate security of supply while maintaining flexibility in a lower-carbon energy market. The Vertical Gas Corridor’s long-term success will depend not only on connecting pipelines, but on creating a truly integrated regional gas market capable of adapting to future energy transitions.
