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SEE gas operators propose changes to Route 1 product

SEE gas operators propose changes to Route 1 product

London, 19 June (Argus) — Gas transmission system operators (TSOs) in southeast Europe have proposed several changes to the "Route 1" integrated capacity product from Greece to Ukraine, including allowing nominations from the Greek virtual trading point (VTP) to count toward exports, subject to approval by the regulator. Route 1, a product offered only between June and October in order to help Ukraine reach its goal of importing roughly 5bn m³ of gas in preparation for the next heating season, bundles together capacity at the Kulata/Sidirokastro, Negru Voda/Kardam, Isaccea/Orlovka, Kaushany and Grebenyky interconnection points. The first monthly auction for Route 1 was held on 29 May , but no capacity sold at the auction as traders pointed toward serious questions over the product's compliance with EU law, a restrictive rule set and insufficient economic incentive to book. During a meeting with regional shippers today, the route's TSOs proposed several changes to the product. The most prominent change would allow nominations from the Greek VTP to count towards exports under the Route 1 product, which would increase the pool of eligible users if approved by the Greek regulatory authority. Under previous rules, Route 1 users would have had to cumulatively nominate at the Greek entry points of Agia Triada, Nea Mesimvria, Amfitriti and Kipi at least as much as they notify Greek TSO Desfa they intend to deliver to Ukraine, but this list explicitly did not include the Greek VTP or Kulata/Sidirokastro. These rules effectively heavily favoured users with LNG capacity at Revithoussa. The operators also clarified that Route 1 users will not be required to obtain a licence from Moldovan regulator Anre and conclude a balancing contract, as the gas will only be transmitted from one Moldovan interconnection to another. It is also not required to sign a balancing contract with Romanian TSO Transgaz, although it is necessary with Bulgartransgaz. The operators also clarified that interested parties do not need to have licences to trade in all five countries along the route, simply to be registered system users with access to transmission services for each of the TSOs. Although several market participants told Argus that even this process can take a month or longer. Other details of the product, such as the 25pc discount at all points except Isaccea entry, Kaushany exit and Grebenyky entry, where a 46pc discount is already applied by the Ukrainian TSO, remain in place. The operators do not appear to have addressed concerns raised by Energy Traders Europe that the offering of discounts on point-to-point capacity on a monthly basis is not in line with the EU's network code on capacity allocation (NC CAM). Traders today still expressed reservations about booking the Route 1 product, noting that the Greek discount to other competing routes into Ukraine is probably not large enough to justify booking given the cost of the tariffs. Argus assessed the Greek day-ahead price at a €6.70/MWh discount to the Slovak day-ahead market, the other most prominent underutilised route to Ukraine, at the most recent close. But at a cost of around €7/MWh for the Route 1 tariffs and volume fees, compared with a monthly Slovak exit tariff of €1.47/MWh and a volume fee of around €0.35/MWh, Route 1 would only marginally be in the money. Further, the 131 GWh/d booking from the Czech Republic to Slovakia for July , as well as a nearly correspondingly-large Ukrainian entry booking from Slovakia , suggests that traders intend to supply a large volume of gas to Ukraine along the main route competing with Route 1. Additionally, worries about the potential regulatory problems associated with Route 1 have not been addressed, leaving some firms uneasy, although all agreed that the potential inclusion of Greek VTP nominations would have a positive effect on potential interest. The next Route 1 auction will be held on the Regional Booking Platform (RBP) on Monday, with around 30 GWh/d on offer. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.