Ukraine’s New Energy Routes: A Gamble on Diversification
Ukraine is making a bold move to reshape its energy landscape, launching two new natural gas import routes – Route 2 and Route 3 – as part of the broader Vertical Corridor initiative. This ambitious project, involving Ukraine, Moldova, Romania, Bulgaria, and Greece, aims to reduce reliance on traditional supply sources and bolster energy security. However, initial auctions for capacity on these routes have yielded disappointing results, raising questions about the immediate viability of the plan.
The Vertical Corridor: A Strategic Overview
The Vertical Corridor isn’t simply about adding new pipelines; it’s about creating a more resilient and diversified energy network in Southeastern Europe. The initiative leverages existing and planned infrastructure to connect LNG terminals in Greece with markets further north, including Ukraine. This is particularly crucial for Ukraine, which has historically been heavily dependent on Russian gas imports. The recent geopolitical shifts have underscored the urgent need for alternative supply options.
According to data from the International Energy Agency’s Q4 2023 Gas Market Report, Europe’s reliance on Russian gas has significantly decreased, but securing alternative supplies remains a top priority. Initiatives like the Vertical Corridor are key to achieving this goal.
Why the Initial Auctions Flopped
Despite offering substantial discounts – ICGB and the Gas Transmission System Operator of Ukraine offered a 46% reduction – the first auctions for Routes 2 and 3 failed to attract any bookings. The primary reason appears to be limited preparation time. The joint capacity reservation products were only recently approved, leaving potential buyers with insufficient time to assess the opportunities and secure necessary contracts.
“The lack of immediate uptake isn’t necessarily a sign of failure,” explains energy analyst Dr. Anya Petrova at the Center for Energy Studies. “It’s more indicative of the complexities involved in establishing new supply chains. Companies need time to conduct due diligence, negotiate agreements, and ensure they have the logistical capacity to utilize the routes.”
Route Details: LNG and Azeri Gas
Route 2: The LNG Pathway is designed to transport Liquefied Natural Gas (LNG) from the Alexandroupolis terminal in Greece to Ukraine. The gas will flow from the DESFA-managed Amphitriti LNG terminal, through the Greece-Bulgaria Interconnector (IGB), then onward through Romania and Moldova before reaching Ukraine. Alexandroupolis is rapidly becoming a key energy hub, as highlighted in a Business AM report.
Route 3: The Azeri Connection focuses on importing gas from Azerbaijan. It originates at the intersection of the IGB and the Trans-Adriatic Pipeline (TAP), following the same Balkan Corridor as Route 2 to reach Ukraine. Azerbaijan has been steadily increasing its gas exports to Europe, positioning itself as a reliable alternative to Russian supplies. In 2023, Azerbaijan exported over 11 billion cubic meters of gas to Europe, a significant increase from previous years.
The Unused Existing Route: A Cautionary Tale
The recent auction for Route 1, which connects the Revythoussa LNG terminal in Greece to Ukraine and has been operational since July 2025, also failed to secure any bookings for January imports, despite offering 4.89 million cubic meters of daily capacity. This reinforces the idea that simply having capacity available isn’t enough; market demand and logistical readiness are equally important.
Did you know? The Revythoussa LNG terminal is a critical import point for Greece and the wider region, with a regasification capacity of approximately 7.5 billion cubic meters per year.
Future Trends and Potential Impacts
Several key trends will shape the future of these routes and the Vertical Corridor as a whole:
- Increased LNG Demand: Global LNG demand is projected to continue growing, driven by energy security concerns and the transition to cleaner fuels.
- Expansion of Balkan Infrastructure: Further investments in pipeline infrastructure, particularly in the Balkan region, will be crucial to maximizing the capacity of the Vertical Corridor.
- Regional Cooperation: Stronger collaboration between Ukraine, Moldova, Romania, Bulgaria, and Greece will be essential for streamlining operations and attracting investment.
- Geopolitical Factors: The ongoing geopolitical situation in Eastern Europe will continue to influence energy supply and demand dynamics.
Pro Tip: Keep a close watch on developments at the Alexandroupolis LNG terminal. Its expansion and operational efficiency will be a key indicator of the Vertical Corridor’s success.
FAQ
- What is the Vertical Corridor? A joint initiative by several Southeastern European countries to diversify gas supply routes and reduce reliance on Russian gas.
- Why did the first auctions fail? Limited preparation time for potential buyers was the primary reason.
- What role does LNG play? LNG provides a flexible and diversified source of gas, particularly through the Alexandroupolis terminal.
- Is Azerbaijan a key partner? Yes, Azerbaijan is a significant supplier of gas to Europe and a crucial component of Route 3.
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