Ukraine’s Southern Gas Lifeline Cut Amid Tariff Dispute

Gas deliveries to Ukraine through the critical Trans-Balkan pipeline ceased on September 1, threatening the country’s energy stability ahead of the winter season. The halt is due to a commercial dispute over high transit tariffs imposed by operators in Romania and Moldova, which have made the route economically unviable for traders, according to former officials and industry reports.

The disruption deals a significant blow to the “Vertical Gas Corridor,” a strategic initiative backed by the United States and European partners. This corridor was designed to transport non-Russian gas—including supplies from Azerbaijan, Greece, and American LNG—to Ukraine via Bulgaria, Romania, and Moldova. However, the project has stalled as an auction for gas transit capacity in September failed to attract a single bid from importers.

Serhiy Makogon, the former head of Ukraine’s Gas Transmission System Operator (GTSOU), placed the blame squarely on the transit operators. “As long as operators don’t make prices attractive for traders, the corridor will remain empty,” he stated, pointing specifically to high fees set by Romania’s state-owned Transgaz and its Moldovan subsidiary, VestMoldTransgaz. Despite proposed tariff discounts of up to 46% from the Ukrainian side, the route remains deserted.

The failure of the corridor highlights a complex regional energy dynamic. While the Western-backed alternative flounders, Russian gas continues to find its way into the European market, often re-sold to Ukraine through intermediaries at a premium. This situation is further complicated by Russia’s strategic pivot towards Asia, underscored by the new “Power of Siberia 2” pipeline deal with China, which signals a long-term shift away from European markets.

For Ukraine, the immediate consequences are stark. The country faces a potential natural gas shortfall of approximately 3.5 billion cubic meters for the upcoming heating season, a gap that could cost an estimated 1.4 billion euros to fill at current prices. With the southern route now blocked by the tariff dispute, Kyiv may be forced to turn to more expensive alternatives, such as direct imports of American liquefied natural gas, further straining its wartime economy.