Ceban: Buying Gas from Gazprom Is a Better Option for Moldova

Purchasing natural gas from Gazprom is a better option for Moldova, since a long-term contract with a Russian gas holding guarantees uninterrupted supply. It is immune from price fluctuations in the spot market, and allows our country to buy "blue fuel" at lower prices during the heating season, which accounts for its highest consumption volume. This was stated by the Chairman of the JSC Moldovagaz Board Vadim Ceban, speaking in the program “Mechanism of Action with Elena Levitskaia-Pakhomova” on the NTV-Moldova TV channel, noi.md reports. Commenting on the statement of the Director General of the Gas Transmission System Operator of Ukraine Sergey Makogon, according to which Moldova can now buy cheaper natural gas provided that it is imported from the European Union through Ukraine, the head of Moldovagaz noted that, indeed, the gas price in Europe is now falling, given the decline in oil prices in world markets. However, Sergey Makogon, in his proposal, is more likely to advertise the potential of Ukraine's gas transmission system, but if you take into account all the costs for transporting gas to Ukraine, and then to the border with Moldova, this alternative option for purchasing gas at special energy hubs will not be more profitable than buying it at Gazprom. The cost of such gas at the entrance to our country will be comparable to the price of $ 164 per 1 thousand cubic meters. m, which is paid for Gazprom fuel from April 1, 2020, but will not have comparable flexibility conditions. Vadim Ceban explained that, in particular, natural gas traded on hubs provides standard delivery conditions without flexibility, requires 100% advance payment and is realized on a take-or-pay basis. That is, it is necessary to pay for all initially requested volumes of gas and it will not be possible to refuse later from part of unnecessary, unclaimed gas. Thus, there will be no seasonal flexibility. In addition, Moldovagaz will need to have a balancing contract in this case, which costs money. We are talking about buying over-planned volumes of gas at a higher price. The head of Moldovagaz said that the company does not have the opportunity to make a 100% advance for gas purchased in Europe since it will require solid working capital, and it will not benefit from the “take-or-pay” principle, and the more acceptable and profitable option for Moldova is purchase of gas from Gazprom under a long-term contract, according to which, thanks to the purchase price formula laid down in it, a further and very noticeable decrease in the cost of gas is expected for Moldova. Vadim Ceban stressed that the task of Moldovagaz is to provide the country with gas at affordable prices so that it can be delivered to final consumers at adequate tariffs. The head of Moldovagaz said that this year the dynamics of the reduction in gas prices is associated with a glut in the gas market. There were many negative expectations related to the possible cessation of the transit of Russian gas through Ukraine, and all traders “stocked up” well with natural gas, which, moreover, turned out to be weakly demanded in the conditions of this mild winter. As a result, large surpluses of gas appeared on the market. Vadim Ceban recalled that the average annual gas price is included in the gas tariff for Moldova’s final consumers, however, the highest volumes of “blue fuel” are consumed in I and IV quarters, during the heating season. And if we compare gas prices at special energy hubs in Europe during the year and gas prices for Moldova under a contract with Gazprom, it is obvious that in autumn and winter gas purchased in Europe would be more expensive for Moldova than purchased from Russian gas holding. At the same time, it would be a little cheaper only in summer, when its consumption in our country is very small. The head of Moldovagaz said that if Moldova had refused to buy gas under a long-term contract with Gazprom, then this year it would have overpaid $ 40 million for gas as a whole. Therefore, according to him, it is important and profitable to buy gas under a long-term and more flexible contract with Gazprom.