Bulgaria and Ukraine Near Gas Deal

If an American LNG tanker ties up in Greece this autumn and some of that gas is sitting in Ukrainian storage by November, it will have travelled through five national pipeline systems in the opposite direction to the one for which much of the network was built. That is the practical test now coming into view in south-eastern Europe: whether infrastructure designed around Russian gas can be turned, commercially and physically, into an alternative supply route for Ukraine.

Bulgaria and Ukraine’s state gas companies, Bulgargaz and Naftogaz, are understood to be close to a bilateral agreement. A Bulgarian MP said the two sides were "close to signing a contract", while adding that "nothing has been signed" and that no legally binding terms exist (SEGA, Fakti). No volumes, pricing or duration have been made public.

The corridor exists on paper. Firms are now paying to use it.

The Vertical Gas Corridor is not one new pipeline. It is a commercial route assembled from existing and upgraded systems across Greece, Bulgaria, Romania, Moldova and Ukraine, intended to move gas from south to north. Its current capacity is about 5.03 bcm a year, with an initial expansion plan targeting 9.41 bcm (Energy Industry Review, ZF).

In early July, the first long-term capacity auctions at Sidirokastro, the interconnection point between Greece and Bulgaria, attracted actual buyers. Around 46% of available capacity was booked for gas years 2026/2027 through 2029/2030 (Energy World, OT). That matters because these are energy traders paying for future access, not governments issuing another declaration of intent.

A booking, though, is only a right to use a pipe. It does not mean gas has been bought, daily flows have been nominated, or a single molecule has reached Ukraine. Romania is still testing whether the tariff, meaning the full cost of moving gas through the system, is low enough for traders to use the route in practice. The quoted cost from Greece to Ukraine is 5.85 EUR/MWh after recent reductions on the Romanian section (Euro2day, Parapolitika). Without a direct comparison with Polish or Slovak transit fees, it is still hard to judge whether that price clears the commercial test.

Bulgaria's expensive mistake becomes someone else's infrastructure

Bulgaria has the most obvious financial reason to make the corridor work. Under a January 2023 contract, Bulgargaz committed to paying roughly EUR 500,000 a day for Turkish regasification capacity, the right to turn LNG back into pipeline gas in Turkey, that it barely used. By the spring, arrears to Turkey’s BOTAS had reached around EUR 360 million (BTA). Actual May deliveries were only 25 million cubic metres, against contracted capacity of 154 million cubic metres a month (EADaily).

After President Radev met Erdoğan in June, that contract was frozen for 15 months: Bulgaria pays only for the capacity it actually uses while the two sides renegotiate (BNR). Energy Minister Iva Petrova said the settlement would not burden Bulgarian citizens. That will need to be tested against the balance sheet. If Bulgargaz ends up carrying the accumulated losses, taxpayers or future gas consumers may still meet the cost through higher regulated tariffs or state capital injections.

If gas bound for Ukraine starts moving through the corridor, Bulgaria can turn a stranded-cost problem into transit revenue. A bad contract would not disappear, but it would at least have a use.

Ukraine needs gas before winter. Only one import route is working.

Ukraine’s baseline target is 14.6 bcm in underground storage before the heating season. To get there, it needs an estimated EUR 3.2–3.8 billion in gas imports at current prices (DiXi Group). As of early July, storage stood at 12.04 bcm, with imports arriving only from Poland at 0.8–1.6 million cubic metres a day (UEEX). The EU has mobilised an EBRD guarantee worth EUR 500 million to help rebuild reserves (European Commission).

A second import direction matters because a pipeline can be technically available and still sit unused if tariffs, contracts or margins do not line up. Poland’s northern corridor saw its latest long-term capacity auction end without any reservations (TelegrafUA). That leaves the southern route as Ukraine’s realistic alternative.

The verdict the numbers support

The corridor is commercially credible, but it has not yet proved itself operationally. Firms are paying for future access. Bulgaria’s BOTAS freeze gives Sofia the incentive to make the route useful. Ukraine has a clear storage need. Greece gets the role of LNG gateway; Bulgaria gets a way to extract value from a damaging contract; Romania gets transit business.

What is still missing is the hard evidence: a signed supply contract, metered south-to-north physical flow, and end-to-end nominations in the public record. The proof will arrive when Ukrainian storage data begin to show gas coming in from the south.