Gas War with Moscow. Risks and Opportunities

The gas conflict with Russia will have serious consequences for Moldova, but it will also open new doors, considering the global restructuring of the pan-European energy market

Sergiu CEBAN, RTA: The fighting in Ukraine continues to make adjustments to the regional and global situation, increasing the risks of protracted sectoral crises: from food shortages to an energy price spike. What damage the military campaign will cause to our country will become clear closer to the second half of the year. Nevertheless, a challenging period is not only a set of problems, but also new opportunities. The Ukrainian authorities and society, being in an extremely difficult socio-economic and psycho-emotional state, show a somewhat unhealthy zeal for involving other countries in an armed conflict in order to maximize its internationalization. Our authorities actively resist these feeble efforts and so far neutralize any attempts to drag our country into the vortex of Ukrainian events, but provocations only increase. A vivid evidence of this is the fact that anonymous threats about mining have been sent to institutions on the left bank of the Dniester for several days, the content of which clearly hints at their Ukrainian origin. Since the first days of the Russian invasion of Ukraine, the main challenge for the region’s countries and most of the EU states has been the issue of continuing/stopping the supply of energy resources transiting through its territory. So far, fortunately, no critical situations in the gas transmission system have occurred. Just yesterday, the Ukrainian authorities again confirmed their intention to continue the transit of Russian gas as long as it is technically feasible. The Ukrainian events still triggered panic in the international markets. As a result, gas prices in Europe updated historical highs in March. At the key European gas hub, the cost of blue fuel reached about 4 thousand dollars per thousand m3. Currently, the hype has partially subsided, however, according to Moldovagaz estimates, in April the purchase price for our republic may be higher than $ 1,000 per thousand m3. By the way, the tariff approved in January of this year stipulates a price of $ 620 per thousand m3. Realizing the high level of dependence on Russian energy resources, various statements have emerged in recent weeks in European capitals about the need to reduce the purchase of natural gas and oil from Russia, as well as to impose separate sanctions on Russian fuel and energy sector. To this end, Brussels plans to develop a general plan for the diversification of supply sources, as well as to invest additional funds in alternative energy. But an equally difficult task for the European Union is to achieve cohesion on the issue of reducing dependence on Moscow as quickly as possible, because the first signs of differences between the member states have already surfaced. So, the day before yesterday, the Hungarian Foreign Minister spoke out against anti-Russian sanctions in the energy field, which, according to Budapest, jeopardize the security of the country’s energy supply. An emergency NATO summit is scheduled for tomorrow in Brussels, which will be attended by US President Joseph Biden. According to some reports, the American leader will be accompanied by the State Department’s Senior Adviser on energy security. Therefore, experts almost unanimously say that one of the central topics of the negotiations should be the EU’s rejection of Russian energy resources. Industry experts believe that it is unlikely that such an ambitious task will be realized swiftly in the coming years, but a deep reconfiguration of the pan-European energy market is an important strategic shift. It is very important for us in Moldova to understand exactly how not only the EU, but also our closest neighbors, who are also consumers and transit countries of Russian natural gas, will act. The Bulgarian authorities, for instance, have already stated that they will not re-sign the contract with Russian Gazprom, which expires in July 2022. Sofia motivated its refusal by the situation over Ukraine. Bulgaria already seems to have backup options: Bulgarians plan to purchase energy resources from alternative suppliers: Qatar and Algeria. The existing infrastructure of Greece and Turkey will be involved for this. Romania is certainly less dependent on Russian gas. However, being aware of the existing risks due to the fighting on the territory of Ukraine, the Ministry of Energy has developed an appropriate Emergency Plan to ensure the safety of natural gas supplies. It defines specific response measures, including the conclusion of intergovernmental agreements with neighboring countries to assist each other in the event of an acute gas crisis. Unlike our European partners, Moldova is in a much more vulnerable position in terms of energy dependence on Russia. One of the most pressing threats is the inability to carry out Moldovagaz financial audit by May 1, followed by the signing of an agreement on the settlement of debts to Gazprom. Moscow has already been proposed to consider the possibility of extending the agreement preparation period, but so far there is no certainty that the Russian capital will respond to our request. And this may threaten with gas supply cessation in early May. Romania has already expressed its readiness to make its gas storage facilities available to our country, as well as to promote the search for alternative sources. In addition, Foreign Minister Bogdan Aurescu stated Bucharest’s willingness to participate in ensuring Moldova’s energy security by building additional gas storage facilities on its territory for the needs of Moldovan consumers. We witness the whole of Europe preparing for the process of abandoning Russian gas and oil, as well as the revision of cooperation with Moscow in the energy sector. So far, everything is going to the fact that we are waiting for another gas war with Moscow and, judging by our government’s statements, we must prepare for the worst scenario. In fact, the current historical turning point caused by the Ukrainian military events requires decisive actions from us to open up new doors and lead to fundamental changes. Moldova has an unprecedented chance to start serious work to reduce its energy dependence on Moscow and its ability to exert political influence. Meanwhile, everything must be done to minimize the damage from the new gas crisis, which threatens to come down on us at the end of spring.