Danube sector Comments Publications

"To be or not to be". Will Moldova run out of gas?

The specter of a compromise between Ukraine and the Russian Federation regarding the transit of natural gas to Europe by the end of this year has raised serious fears in the Republic of Moldova (RM). After all, the country is, in fact, completely dependent on Russian gas. And this means that the coming winter, in the worst case scenario, could be a real test for the Moldovans.

Estimates and decisions

The current contract between the Russian Federation and the Russian Federation, and in particular between the state-owned enterprises Moldovagaz and Gazprom, foresees the end of deliveries of Russian gas to Moldova on December 31.

However, in Chisinau there is still no clear understanding of what will happen after 1 January 2020, especially against the background of current relations between Ukraine and the Russian Federation. However, some Moldovan politicians are trying to play a "gas card" as a trump card for their electoral support.

Thus, at the beginning of September 2019, Moldova's pro-Russian President Igor Dodon made two visits to Moscow and one to Brussels. He first traveled to Moscow with the Minister of Economy and Infrastructure, where both officials met with Gazprom chief Alexei Miller. And then he made his own visit to the White Stone, where he met with Russian President Vladimir Putin. After returning from trips to the Russian Federation, the public did not receive a clear answer regarding the prospects for gas production in winter. Only Foreign and European Integration Minister Nick Popescu said talks were underway to sign a new contract for Russian gas supplies to the Republic of Moldova. At the same time, Igor Dodon has already hastened to announce that the price of gas for Moldova will be reduced from 1 October 2019 year. At the same time, Prime Minister of the Republic of Moldova Maya Sandu, in turn, announced that there was a risk that the country would not receive Russian gas and that some technical solutions would be applied. Sandu told the media that there is a risk that Moldova will not be able to receive Russian gas from 1 on January 2020 if Ukraine bans its transit through its territory.

However, according to the Prime Minister of Moldova, although the situation is serious, there are a number of decisions regarding the country's natural gas supply. One of them is to buy it earlier, at a lower price, to store it in stores in Ukraine and then to receive it in winter for consumers in Moldova. However, significant financial resources are needed here.

There are other options, but they depend on whether they can be completed by the end of the year. In particular, it is about getting gas from EU countries. It is possible to purchase gas through other gas pipelines from Bulgaria and Romania through the southern regions. In this case, Moldova will not depend on Ukraine's negotiations with Russia.

Another option is to obtain gas through the Yasi-Ungheni-Chisinau pipeline, the completion of which should take place by the end of this year. However, there are more questions than answers.

There is another option - the purchase of Russian gas at the border of the Russian Federation. In other words, Gazprom announces the purchase price for gas to the Russian-Ukrainian border, after which Chisinau has to agree with Kiev on the transportation of gas to the border with Moldova.

And are there alternatives?

However, there are many controversial issues with the options considered by the Moldovan government as an alternative to addressing gas supply to the country.

Former Director of the National Energy Regulatory Agency (NARE) Victor Parlikov says that one of the most realistic solutions is the latest option - to buy gas at the border between Russia and Ukraine. In his view, there are many political and economic differences between Ukraine and Russia, but in the case of Moldova, economic interest is important for each of the parties.

At the same time, energy expert Sergei Tofilat is not so optimistic about this: “First, it is necessary for Gazprom to go to announce the price of gas at its border as the price for sale to its consumers. Next, it is necessary to determine whether there is a technical solution for transit through Ukraine. And finally, if such a solution is possible, then we need to understand what the final gas price will be after Ukraine's transit. ”

According to experts, the purchase of gas in Romania via the Trans-Balkan Pipeline is also possible, but it has its pitfalls. Yes, Victor Parlikov and Sergei Tofilat believe that by the end of 2019 this is unlikely. It is unclear what kind of gas and gas supply options Moldova and Romania have, which are already dependent on Russian gas supplies. For example, only Romania receives from Russia 15-25% of gas consumed. It is also unclear what the cost of such gas will be for Moldovan consumers. In addition, according to Sergiy Tofilat, it is necessary to make some investments in the compressor stations and carry out some targeted upgrades in order to ensure reverse gas supplies to Moldova. And it will take time and money again.

The third decision being considered by the Moldovan government is to buy a certain amount of Russian gas in advance and store it in gas fields in the Chernivtsi region. This can be done through a gas pipeline going to the northern part of Moldova. However, such a solution will be optimal only for the north and center of Moldova, including Chisinau and Transnistria. South will not be able to reach this gas due to the small capacity of the transport pipe.

The prospect of the Yasi-Ungheni-Chisinau gas pipeline is also unclear. There has been a lot of discussion lately in the context of increasing energy interconnection between the Republic of Moldova and Romania. For this, the foundation was laid - the Yasi-Ungeni gas pipeline. 20 August 2013 year was signed for its construction, 27 August 2014 year - open Yachi-Ungheni site. Since 2016, the RM government has decided to continue this pipeline to Chisinau. The decision was made against the backdrop of conflicts of interest between oligarch Vlad Plakhotniuk, who actually headed the RM, and Russia. In the same year, contracts for the commencement of works were signed and Vestmoldtransgaz, which operated the Iasi-Ungheni gas pipeline, was privatized by Transgaz, a Romanian company. This pipeline should have a length of 120 km and a capacity of approximately 1,5 billion cubic meters of natural gas from Romania to the Republic of Moldova annually.

However, according to Maya Sandu, it is an alternative to only three districts of Moldova and nothing more. In addition, if the PM project is ready by the end of 2019 year, then from the Romanian territory - only by the middle of the next. Therefore, the government will not be able to use them in January 2020 year.

Romanian Ambassador to the Republic of Moldova Daniel Ionit recently published a new image of the construction site of the Ungheni-Chisinau gas pipeline. According to the official, they "make every effort to complete it in time." However, from the Romanian side, this pipeline will be put into operation no earlier than March 2020, the Minister of Economy and Infrastructure of Moldova Vadim Branzan has made such forecasts. Under such conditions, Moldova cannot count on gas from Romania, through this branch, at least for the first quarter of next year.

Transnistria strike

A very important and separate aspect of this gas confrontation is the fact that Moscow, by restricting gas supplies through Ukraine, actually condemns the separatist regime in Transnistria. If Moldova is left without Russian gas, Tiraspol will lose a permanent source of currency, which during the 27 years of the separatist regime supported the enclave. Tiraspol took Russian gas and used it free of charge during electricity production at Kuchurgan TPP. This electricity was then sold to Moldova for US dollars. Therefore, the separatist regime had the currency to survive. The lack of gas will also affect the Ribnitsa Metallurgical Plant, an important budget-forming enterprise in the region.

In fact, the ongoing gas confrontation between Ukraine and Russia could have negative economic consequences for Moldova. It also entails further complication of the political situation in the country. The President of the Republic of Moldova, Igor Dodon, who is Moscow's favorite, goes to Russia, where he negotiates something and announces it to the population, but, in fact, it is not viable. In turn, the Maya Sandu government is forced to realistically solve existing problems at the local level, facing considerable difficulties. As a result, making unpopular decisions. This leads to the fact that the president looks much better in the public eye than the prime minister. Everything would be fine if it did not happen before the local elections in Moldova that will take place at the end of this year and the presidential elections scheduled for November 2020.

However, one thing is clear, Moldova has ways of getting out of the situation with gas supplies to the country, but each of them has its own problematic issues, the solution of which will have to be implemented in any case, regardless of the situation in relations between Ukraine and the Russian Federation. How well they are resolved depends directly on the country's future energy market. Either it will remain fully dependent on one source of supply and hence political influence from the outside, or it will become more independent and independent in the choice of the supplier of such key energy resource as gas.

It is difficult to say whether Moldova will remain without gas this winter. More likely not, it will not remain. However, the authorities will have to go through "seven circles of Hell" before this issue is resolved, and there is very little time left until the end of the year ...

Konstantin Uzdrish, journalist, political scientist,

Kishinev, Republic of Moldova