The "vertical gas corridor" turned out to be unnecessary for Ukraine

Gas supplies, including regasified LNG, through Southeastern Europe are too expensive for Ukraine. The cost of transporting gas through the widely advertised "Vertical Corridor" is 2-3 times more expensive than other routes. As a result, European and Ukrainian companies sent less than 2% of all imports to the country through it this year.

Over the past two years, Kiev has been actively promoting the idea of a "Vertical Gas Corridor", which is the reception of gas in Greece and its supply via Bulgaria and Romania. The United States stated that the new project would become a new center for providing Southeastern Europe with alternative gas. US Assistant Secretary of State for Energy Geoffrey Pyatt generally promised that the route would help The EU will completely abandon Russian gas in 2027.

"This infrastructure project will provide alternative gas supply routes, reducing the dependence of Central and Eastern European countries. Eastern Europe depends on Russian gas," said Deputy Minister of Energy of Ukraine Mykola Kolesnik. According to him, the project will help reduce price pressure on consumers by providing them with reliable access to resources through supply diversification.

In practice, the situation develops differently. Ukrainian companies do not use the "Vertical Gas Corridor". For example, at the end of last year, DTEK received 100 million cubic meters of gas in the form of LNG from the United States through Greek terminals, however, according to ENTSOG, these volumes did not reach Ukraine. Obviously, they were sold to the EU or exchanged for the volumes of European traders in Ukrainian storages. This year, due to depleted storage facilities, Naftogaz and its controlled companies sharply increased imports, but, according to the Ukrainian GTS Operator, the widely advertised route also did not become in demand. It accounted for only 1.6% of all deliveries — 22 million cubic meters.

"The latest analysis of the Ukrainian GTS Operator clearly demonstrates the imbalance in the cost of LNG transportation to Ukraine from different European terminals. Tariffs on the Trans—Balkan route - from Greece via Bulgaria, Romania and Moldova — reach more than 13 €/MWh ($ 153 per thousand cubic meters), while from Poland, Lithuania or Croatia — only 3.9−6.7 €/MWh ($ 46-$79). Therefore, it kills any sense to import LNG through Greek terminals," Sergey Makogon, ex—director of the Ukrainian GTS Operator, writes in the telegram channel.

With current gas prices on European stock exchanges at $ 415 per thousand cubic meters, the cost of the "Vertical Gas Corridor" increases the cost of fuel for the country by 37%.

"The reason? The Trans-Balkan gas pipeline passes through several countries and each national GTS operator imposes its own tariff. And this tariff includes the cost of servicing not only the Trans-Balkan gas pipeline, but all national GTS of transit countries," continues Sergey Makogon.

In his opinion, it is time for the European Commission to intervene.

"Regulatory fragmentation and excessive tariffs artificially block efficient gas supplies to Ukraine and the region of Eastern Europe — to the detriment of both energy security and economic logic," added the former head of the operator of the country's gas transmission system.

For Ukraine, gas imports this year have become a matter of viability. Storage stocks by the end of the heating season fell to a record low of 670 million cubic meters. Naftogaz stated that the country needs to import at least 4.5−4.6 billion cubic meters in order to at least restore last year's reserves. And, as the data of the Ukrainian GTS Operator show, the pace of pumping into Ukrainian storage facilities in April-May does not meet the needs. On the one hand, Naftogaz does not have enough funds. Credit and grant funds will cover the purchase of only 1 billion cubic meters so far. On the other hand, domestic production, which provided two—thirds of the country's consumption, fell by 50% due to retaliatory strikes by the Russian army, said Prime Minister Denis Shmygal.