Bulgaria and Ukraine Near Gas Transit Deal

If a tanker carrying American LNG berths in Greece this autumn and that gas reaches Ukrainian storage by November, it will have crossed five national pipeline systems in a direction for which much of that infrastructure was never really used. That prospect is now more plausible than at any time since Moscow turned pipeline gas into political leverage. But there is still a long distance between a commercial route that looks workable and gas that has actually arrived.

Bulgaria and Ukraine's state gas companies, Bulgargaz and Naftogaz, appear close to a bilateral deal. A Bulgarian MP said the two sides were "close to signing a contract", while also stressing that "nothing has been signed" and that there are still no legally binding terms (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 chain of existing and upgraded systems linking Greece, Bulgaria, Romania, Moldova and Ukraine into a south-to-north commercial route. Its current capacity is about 5.03 bcm a year, with a first expansion planned to take it to 9.41 bcm (Energy Industry Review, ZF).

For Maltese readers used to seeing Brussels policy arrive through concrete bills, tariffs and regulatory obligations, this is the important part: the project has moved beyond political language. In early July, the first long-term capacity auctions at Sidirokastro, the Greece-Bulgaria interconnection point, attracted real buyers. Around 46% of available capacity was booked for the gas years from 2026/2027 to 2029/2030 (Energy World, OT). These are energy traders paying for future access to pipes, not ministers cutting ribbons.

A booking, however, is only a right to use capacity. It does not mean gas has been bought, daily flows have been nominated, or one cubic metre 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 euro/MWh after recent reductions on the Romanian section (Euro2day, Parapolitika). Without a clear comparison with transit through Poland or Slovakia, it is still hard to know whether that price is commercially attractive.

Bulgaria's expensive mistake becomes someone else's infrastructure

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

After President Radev's June meeting with Erdoğan, that contract was frozen for 15 months. Bulgaria now 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 needs to be checked against Bulgargaz's balance sheet: if the company absorbs the accumulated losses, taxpayers or future gas consumers may still end up paying through higher regulated tariffs or state support.

If gas bound for Ukraine starts moving through the corridor, Bulgaria changes the nature of the problem. What looked like stranded cost becomes transit income. A contract that was bleeding money becomes a reason to push gas from south to north.

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. At current prices, reaching that level requires an estimated 3.2-3.8 billion euro in gas imports (DiXi Group). In 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 500 million euro to help refill reserves (European Commission).

A second import direction matters because infrastructure alone does not move gas. A pipe can exist 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 still operationally unproven. Firms are paying for future access. Bulgaria's BOTAS freeze gives Sofia the right financial incentive. Ukraine's storage gap creates the demand. Greece gains an LNG gateway role; Bulgaria gets a route out of a costly contract; Romania gains transit business.

But there is still no signed supply contract, no metered south-to-north physical flow, and no public evidence of end-to-end nominations. The real test will come when Ukrainian storage figures start showing gas arriving from the south.