The Vertical Gas Corridor is increasingly moving beyond its original purpose as an emergency response to disruptions in Russian gas transit and developing into a permanent north-south energy infrastructure network. The initiative now connects transmission system operators from nine countries: Greece, Bulgaria, Romania, Moldova, Ukraine, North Macedonia, Serbia, Hungary and Slovakia.
The expansion reflects a broader shift in Southeast Europe’s gas strategy. Instead of focusing only on replacing disrupted supply sources, countries are working to create a more flexible regional system capable of moving gas between LNG terminals, storage facilities and national markets. The long-term objective is to strengthen security of supply, improve market connectivity and reduce dependence on individual suppliers.
The development comes at a challenging moment for European gas markets. EU storage facilities were reported at 54% capacity on 19 July, compared with 64.8% during the same period a year earlier. Working inventories stood at approximately 59 billion cubic metres, around 11 bcm below 2025 levels.
The market structure also created additional pressure. When short-term gas prices traded above winter contracts, the economic incentive for storage injections weakened, leaving governments and utilities with a difficult choice: secure additional volumes at higher prices or accept greater exposure ahead of the winter heating season.
Southeast European markets have already reflected these tighter conditions. Average CEGH gas prices reached €60.65/MWh in the second half of July, while Greek gas prices averaged €48.61/MWh. Serbia reported that European gas prices had increased by almost 30% since April, reaching around €65/MWh, although regulated household prices remained unchanged and the country continued relying on its oil-indexed Russian gas agreement.
At the infrastructure level, diversification efforts are progressing across the region. Croatia’s Krk LNG terminal is expected to increase annual capacity by approximately 1 bcm in 2027, further expanding access to imported liquefied natural gas. Croatia and Hungary are also working on additional cross-border transmission capacity, while Vertical Gas Corridor partners continue assessing the technical and regulatory requirements needed to strengthen integration with Serbia and North Macedonia.
Serbia is advancing several measures to improve supply security, including a planned gas interconnection with Romania and increased storage availability through leased capacity in Hungary. The Banatski Dvor storage facility was reported to be around 93% full, holding approximately 482 million cubic metres, while future upgrades are expected to increase withdrawal capacity to 12 million cubic metres per day.
However, the success of the corridor will depend not only on physical infrastructure but also on effective market utilisation. New pipelines can become expensive security assets if long-term capacity bookings remain insufficient. Similarly, limited reverse-flow capability, complex tariff structures or poorly coordinated capacity products could reduce the practical value of new connections.
The corridor’s commercial success will therefore depend on deeper regional market integration, including harmonised capacity auctions, transparent congestion management, competitive cross-border tariffs and equal access to LNG and storage infrastructure.
For Bosnia and Herzegovina, diversification remains an urgent priority. Gazprom Export increased the third-quarter gas price paid by Energoinvest by 14.42%, reaching approximately €0.50 per cubic metre. Republika Srpska has allocated €48.5 million for the Šepak–Novi Grad gas pipeline, while discussions continue regarding southern interconnection routes and the potential role of LNG supplies delivered through Croatia.
Although each diversification project carries political, financial and regulatory challenges, continued dependence on a single supplier leaves consumers and industry exposed to external pricing decisions and supply risks.
Natural gas will remain an important component of Southeast Europe’s energy system as coal-fired generation declines and renewable energy sources expand. However, future infrastructure investments must also consider long-term changes in gas demand, stricter methane regulations and the possibility of adapting selected assets for hydrogen and renewable gases.
The most valuable projects will be those that provide immediate improvements in supply security while remaining flexible in a lower-carbon energy market. The long-term success of the Vertical Gas Corridor will therefore depend not only on connecting pipelines, but on creating a genuinely integrated regional gas market capable of supporting Southeast Europe’s broader energy transition.
