Non-diversified energy infrastructure, the Transdniestrian factor, high dependence on energy supplies from Russia and the continuing tension in the gas transit issue create a set of threats to Moldova’s energy security
Last Friday, Moldovan President Maia Sandu held a meeting with energy experts to address the power purchase, sectoral projects implementation, energy sources diversification, including through integration with the Romanian energy system. A set of practical measures to enable greater transparency in this area, as well as eliminating any corruption schemes and strengthening the country’s energy security were also raised.
Today, among all the Eastern Partnership countries, Moldova is perhaps one of the most vulnerable countries with an increased level of risks in the energy sector. This was especially revealed during the period of the so-called “gas crises” between Russia and Ukraine in 2009 and 2019, the first of which, along with other pressing problems, prompted Chisinau in 2010 to take more decisive actions towards integration with the common European energy market.
The first step towards creating alternative sources of supply was the joint project of the Iasi-Ungheni transboundary gas pipeline with Romania. Its main task was to meet the basic needs of Moldova in the event of another “gas escalation” between Moscow and Kiev. The main pipeline string to Chisinau was completed only last summer, therefore, in the near future, this facility cannot yet be considered as a full-fledged alternative. Nevertheless, the gas pipeline is still an important strategic project designed to interconnect energy systems of the two states.
Another lack of clarity when signing the Russia-Ukraine transit agreement in 2019 showed that the TurkStream and the reverse use of the Trans-Balkan gas pipeline could become a very realistic substitute for the traditional gas transportation route to Moldova. In addition, such logistics creates conditions for obtaining liquefied natural gas of American origin, which can come from the LNG terminal in Greece. At the same time, to enable a phased Russian energy resources diversification, experts voiced models of the theoretical possibility of the American gas transit to Moldova from northern LNG terminals in Poland through Ukraine.
Meanwhile, the prospects for ensuring the state’s energy security are most closely related to the Third Energy Package full implementation by Moldova, which Chisinau failed to do by January 1, 2020. Most likely, the main reason was the strong factor of the joint Russian-Moldovan JSC Moldovagaz and the desire of the Russian gas monopoly PJSC Gazprom to maintain a dominant position in the Moldovan market. Therefore, it should not be ruled out that, given the approaches of the new Moldovan president, one of her goals will most likely be to ensure genuine gas market liberalization.
There is no doubt that the agenda of the February 19 meeting at the Maia Sandu administration particularly addressed the issue of electricity purchase for the next year. The current contract for the electricity supply, under which 100% is purchased from the Moldavskaya GRES, is known to expire on March 31. It should be recalled here that during her January visit to Kyiv, Maia Sandu reached a principled agreement with her Ukrainian counterpart on resuming electricity supplies to Moldova from Ukraine, as well as on its transit to Romania. In addition, back in 2019, , Maia Sandu, as Prime Minister, added a clause in her government’s program on the need to terminate the contract with the MGRES and purchase electricity exclusively from Ukrainian suppliers.
Moldovan politicians speak regularly about the refusal of electricity supplies from Transdniestria. However, it appears that putting this goal into practice and replacing the MGRES with alternative sources is not so easy, given at least the fact that the Ukrainian electricity can be transported only through the left-bank power lines. Reducing dependence on the Cuciurgan power plant remains an urgent task for the country, which might be probably realized only if the regional market climate changes dramatically and large infrastructure projects in the Moldovan energy sector are proposed.
It is important to note that, while Kiev considers the Moldovan market solely in terms of higher profitability of its energy generating enterprises, Romania, according to experts, is showing a much deeper strategic interest in Moldova’s energy assets, including the MGRES. A vivid confirmation of this is the well-known espionage story involving Inter RAO employee Carina Turcan. However, the station will most likely be of increased interest to Romanian investors if it is connected to an alternative source of natural gas, which can neutralize the unforeseen behavior of the competing Ukrainian authorities. In this regard, it is quite possible to expect infrastructural initiatives aimed at extending the Iasi-Ungheni-Chisinau gas pipeline to Tiraspol, which will moreover become an additional element of enhancing Moldova’s common energy space.
Thus, the very near future will make it clear which path Chisinau and Maia Sandu personally will choose in the energy sector, including the issue of reducing the consumption of electricity generated at the Moldavskaya GRES. Such a step will obviously deal a severe blow to the left-bank economy and is unlikely to benefit relations between the two banks. However, the largely justified cold-blooded approach in relations with the Tiraspol administration might have rather unpredictable consequences. It can work both towards the higher ratings of the PAS party loyal to the president, and towards the strengthening of the Socialist party positions, which will not miss the opportunity to criticize the head of state for putting pressure on the Transdniestrian region and breaking traditional economic ties within the state.
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