Expert: Moldova Will Remain a Russian Gas Consumer for Many Years to Come

Anton SHVEС Construction of the Ungheni-Chisinau gas pipeline section for the Republic of Moldova makes sense exclusively in terms of political PR. That is why a technologically uncomplicated, but economically and logically useless project cannot be put into operation for many years Recently, Romanian Prime Minister Ludovic Orban promised to complete the construction of a 120-kilometer stretch of the long-suffering Ungheni-Chisinau gas pipeline, designed to connect the gas transmission systems of Romania and Moldova, by the end of this year. The head of the general contractor of the Transgaz Romanian company, responsible for the construction of the site, was even more optimistic and called the completion date August 1. According to the declared calculations, 106 out of 120 kilometers of the pipe (90%) have already been laid and are ready for operation. Meanwhile, industry professionals are more evasive in their forecasts. The director of Moldovagaz JSC Vadim Ceban, although reaffirming his hope for the construction to be completed in 2020, still states that “a certain amount of Romanian gas from the Black Sea can reach Moldova only in 2022 or 2023”. The explored reserves of the Black Sea shelf in the Romanian water area (up to 6.3 billion cubic meters per year) are sufficient to cover Romania's own electricity needs (the country actively uses nuclear energy and electricity generated by hydroelectric power stations) and significant export abroad. However, in practice, they still have not been able to start developing them: Romanian companies do not have the required technologies, and world-famous companies are especially cautious about projects in the Black Sea. This was the case of ExxonMobil which signaled its intention to withdraw from projects to develop the Black Sea shelf of Romania. Austrian OMV and Polish PGNiG are also in no hurry to get involved in the work, although they openly show their interest. Theoretically, the Russian “Lukoil” could help Romania, but in this case political problems arise on the Romanian side. In fact, right now Romania itself is purchasing Russian natural gas, which is supplied in transit through the territories of Ukraine and Moldova. It may take many years before the situation changes diametrically. Therefore, today the Iasi-Chisinau gas pipeline can be filled exclusively with Russian blue fuel supplied by the Russian monopoly Gazprom via the so-called “Turkish stream” (via Turkey and Bulgaria). Thus, be it direct deliveries through Ukraine or reverse ones through the Turkish Stream and Romania, Moldova will continue to consume merely Russian gas for many years to come. Of course, pooling the gas transportation systems of Romania and Moldova will have tremendous symbolic significance, no less than the first joint meeting of the Moldovan and Romanian parliaments held during the premiership of Iurie Leanca (by the way, it was Leanca who advocated the ​​building of the Ungheni-Chisinau section). It will also help strengthen Romania’s position as a real player in the gas market, increasing its transit potential and strengthening transport infrastructure with the view that the development of offshore gas fields will someday begin. In addition, it fits into the Iasi County-Ungheni logistic connection. This initiative is interesting separately for Moldova in terms of the Transdniestrian problem. Today, gas is physically transported through the left bank to the rest of Moldova, which allows Tiraspol to have strong positions in gas issues, including accumulating historical debt for Moldovagaz JSC. With reverse deliveries of even Russian gas, the influence potential of Tiraspol will noticeably decrease. This is categorically important in the context of the ongoing negotiations regarding the separation of the gas transmission system of the whole Moldova in accordance with the requirements of the third energy package of the European Union, which could be completed by 2020. Without exaggeration, the regional energy balance will depend on how this task is realized. This is another reason why so much attention was riveted to the Ungheni-Chisinau section this year. in a year, however, it can be totally forgotten, as happened in previous periods. Strictly speaking, the mentioned pipeline section should be perceived precisely in political and even geopolitical logic, since its economy and logistics do not bear any advantages in comparison with the traditional gas transit through the territory of Ukraine. Only Romania, which has idle gas infrastructure in the Iasi-Ungheni section, is interested in using the capacity in this section. In addition, the calculated data show that the price of gas supplied from Romania will be higher than from Ukraine. However, launching this pipeline segment can significantly transform Romania's role in the market, the situation in the Transdniestrian settlement, and also have tremendous symbolic significance for Romanian-Moldovan relations and, therefore, for the domestic policies of both countries. What will outweigh, the economy or politics, will become clear in the next six months.