After nearly four years of war and repeated damage to its energy infrastructure, Ukraine is purchasing liquefied natural gas (LNG) from the United States for the first time, in a strategic move that connects Washington, Athens, and Kiev. December-March through the “vertical corridor”.
The vertical corridor goes from Greece to Ukraine through Bulgaria, Romania and Moldova, and is intended to provide redundancy and Western countermeasures to corridor programs operated or planned by China, Russia, Turkey and Iran. The hope is that through this connectivity from south to north, the dependence of Eastern European countries on Russian gas will significantly develop.
Commercial opportunities alongside aid to Ukraine
Greece, Bulgaria, Romania and Hungary agreed on the development of the corridor already in 2016, with Ukraine, Moldova and Slovakia joining last year. The ambition was to promote the processes at a much earlier stage, but previous tenders were not successful, because LNG importers preferred a cheaper route – through Poland.
The countries participating in the project realized their mistake, and changed direction. The Greek operator DESFA, the Bulgarian Bulgartransgaz, the Romanian Transgaz, the Moldovan Stamoldtransgaz and the Ukrainian GTSOU decided to lower transit rates by 10%, while Romania and Moldova reduced taxation by up to 50%.
“With the help of the mechanism, we are not only assisting Ukraine in its efforts to secure gas supplies in the winter, but also creating commercial opportunities for operators in Moldova and throughout the region,” said the Moldovan Minister of Energy. According to him, Chisinau has already secured more than 90% of Moldova’s expected gas consumption for the coming winter.
As a result of the drop in fares, there is a demand for a route that departs from most of Vossa in southern Greece. Already in October, the companies DEPA from Greece, DTEK from Ukraine and Expo Trading from Switzerland made sure to reserve 30% of the power for them: 6.32 gigawatt-hours – from November to April. In Kiev, they approved 200 million euros in financing for the national company Naftgaz, which is satisfied with the move, because the combination between the demand for gas and the Russian vulnerabilities in energy assets is expected to lead to an increase in tariffs of about 10%.
The American interest: to dry up Russia
From the American point of view, they are interested in bringing the Russians, as much as possible, to zero gas exports, while Zelensky explained that the deal “will cover close to 2 billion euros of gas imports” required following the Russian damage to the infrastructure. “This support is very important for the difficult winter ahead, with daily attacks on civilians.” Mitsotakis replied that “Ukraine gets direct access to diverse and stable energy sources, while Greece becomes a delivery point for American Monzel natural gas to Central and Eastern Europe.”
The American influence on the extensive move is not only evident from the very deal with Kiev or from the very existence of the vertical corridor, but from the way the Greeks are realizing it now and intend to expand it in the future. Along with Rabithusa, the Greeks plan to include in the plan the vertical corridor that includes Alexandroupoli and Komotini, where gas arrives from Azerbaijan.
In Alexandroupoli there is an American military logistics activity that is related to the presence in Europe, but no less important than that is the neglect of the largest port in Greece and the most important in Europe: Piraeus. A reasonable explanation for this lies in who operates the port of Piraeus, the Chinese Cuzco. In the days when US President Donald Trump is trying to limit Russia’s economic activities, he certainly does not want to benefit China.
Therefore, at the end of a meeting that took place in November in Athens between US Secretary of Energy Chris Wright and Secretary of the Interior Doug Burgum, it was agreed on a significant promotion of track 2 and track 3 of the vertical corridor as early as next year. Route 2, which is expected to be in the next phase, left Alexandroupoli and will also reach Ukraine. The parties involved attach importance to it for decentralizing risks vis-à-vis Moscow.
Greece will find it difficult to reduce its dependence on American gas
Alongside the political and security issues, the business importance attributed to the move in Washington is also evident. According to a report on the Greek “Kathimarini” website, the Americans acted against Athens to limit the transfer of natural gas from Azerbaijan to Ukraine, through the TAP pipeline that comes from Turkey to Greece.
In the first stage, the United States of America imposed a veto on the transfer of gas from Azerbaijan through the vertical corridor, but later – acceded to Athens’ request that the supply from Baku be used for transfers to Ukraine only as a last option.
Athens officials had to accede to Washington’s demands, not for business considerations. The proportion of LNG out of all Greek gas imports jumped in the first nine months of the year to about 40%, from about 26% in the corresponding period last year. Of all Greek LNG imports, the United States supplied 19.62 terawatt-hours (88%). For the purpose of comparison, Nigeria, Norway and Algeria together transferred 2.79 terawatt-hours.
The current project leads to a situation where it is difficult to see Greece reducing its dependence on American LNG, if at all the other way around. The advantage for her lies in the increased business dependence on it: if the project is completed as planned by 2027 and 14 BCM (billion cubic meters) will be transported, all parties involved will be dependent on Greece – instead of Russia, the current source of the same amount of natural gas.
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