The Vertical Gas Corridor project, aimed at enhancing energy connectivity in Southeast Europe, is experiencing significant hurdles as it struggles to attract demand. The most recent capacity auction for April concluded without any bookings, a clear indication of the prevailing weak interest among market participants.
This latest auction failure adds to a troubling trend, with three of the last four auctions since late 2022 failing to draw participants. While various factors have influenced individual tender outcomes, the consistent lack of engagement points to a disconnect between the corridor’s projected utility and actual market demand.
A major factor contributing to this situation is the current pricing landscape. High natural gas prices across Europe, coupled with relatively ample storage levels in Ukraine, have diminished the urgency for additional imports. As Ukraine has already secured substantial volumes earlier in the winter season, there appears to be a reluctance to engage in more expensive supply routes at this time.
Moreover, uncertainties surrounding the project’s future structure are emerging. Stakeholders are questioning whether the existing auction format will remain or shift towards longer-term booking products. Greek gas transmission network operator DESFA has highlighted the importance of making timely decisions, cautioning that prolonged indecision may discourage further market participation.
In addition to immediate market conditions, broader regulatory and investment concerns loom over the initiative. A lack of clarity regarding regulatory support, insufficient visibility on investment commitments, and ongoing challenges related to diminishing Russian gas flows are contributing to skepticism from potential users.
The support for the corridor is not uniformly strong among EU member states, with discussions regarding alternative supply routes reportedly gaining momentum. In light of these developments, without clearer policy guidance and enhanced institutional backing, the future viability of the Vertical Gas Corridor remains precarious.
