Is Moldova to Face ‘Gas Famine’ Next Winter?

Sergiu CEBAN

The outlook of gas supply for the next winter in Europe in general and in our country in particular remains vague. The public opinion meanwhile has already started to prepare for possible problems during the heating season

The energy sector is still in the forefront of European and international concerns. Experts and politicians predict further aggravation of the situation in this area and a rapid increase in the price, especially for natural gas. Last week, the price of European futures on the blue fuel exceeded $ 1900 dollars per thousand cubic meters because of the accident at the Sleipner field in Norway. It had been preceded by a strike of workers at Norwegian production facilities. Moscow has long sensed the right moment and went all-in, methodically reducing gas supply to European consumers. Creating an artificial shortage of energy resources eventually led to a sharp jump in prices. This rapid deterioration forced many European countries to resort to emergency measures, because alternative suppliers are working within their capabilities and are not yet able to increase their supply volumes. In this context, experts give not the best forecasts, expecting the closure of many enterprises and disorganization of certain sectors of the European economy. We should also expect an attempt to ration the gas consumption of household consumers, and this can already lead to increased social discontent resulting in political consequences. However, European politicians are already making rather pessimistic appeals to prepare for a harsh winter, because energy prices will continue to grow and supply disruptions are quite likely. The main alarm signal for Europe was Moscow’s decision to stop pumping gas through the crucial Nord Stream-1 pipeline. Officially, this was done for technical work, but the real reasons lie in the sanctions policy and the Russian turbines affected by it. Most likely, the issue will be settled, but there will be many more such episodes, especially during the cold season, because the Kremlin will try to squeeze the maximum out of Europe’s energy dependence and will use the available levers to the full. It will be a lengthy road for the EU to move away from Russian energy. Although European countries are determined to do it once and for all, experts say it will take at least several years, so this year EU citizens will have to go through a very difficult historical period and at the same time to begin building the appropriate infrastructure to organize a stable supply of the U.S. liquefied gas. The energy crisis hovering over Europe is also felt by the citizens of our country, who from August 1 will be paying a new increased tariff for gas. The ANRE has not satisfied in full the request of Moldovagaz to increase the cost and set a new tariff in the amount of 22.27 lei per cubic meter of gas for final consumers, although the company generally asked for 29.48 lei. And it seems to be not the limit, because in August we will be buying gas at a new record price over 1460 dollars per thousand cubic meters. Energy experts do not believe that we will be able to return to last year's purchase prices and recommend the Moldovan population to prepare for a very difficult winter period. By the way, our politicians are also coming to realize that Moldova is far from being stable in the energy sector, and are beginning to prepare public opinion for difficult times and possible problems during the heating season. The ruling party, together with the government, promptly launched work on a bill to create an energy vulnerability reduction fund. It is planned to provide compensation for natural gas, thermal energy and electricity from this source. The fund also foresees the possibility of financing the purchase of firewood or other basic necessities. In addition, our authorities have become more serious about the fact that the Russian Gazprom may cancel the contract at any time, after the government failed to audit the historic debt of the right bank of the Dniester by May 1. Most likely, given the whole set of risks, the Cabinet of Ministers decided to move the issue forward, and the day before the Emergencies Commission allowed the Public Property Agency to negotiate directly with international companies to discuss acceptable conditions for the audit, because none of them had previously shown interest in participating in the tender. Moldovan experts, however, do not believe Gazprom can seriously consider canceling the contract, because Russian assets on the left bank of Dniester River and the region itself are at stake. Without the current contract, Moscow may lose the ability to supply gas to Transdniestria, although alternative supplies are actively being sought. In addition, Maia Sandu, who recently announced that she was not going to sell part of the country just to have cheaper gas for six months, indirectly confirmed that Moldova’s energy security is closely linked with the Transdniestrian settlement. Parliament Speaker Igor Grosu assures that we will not run out of gas this winter. To that end, last week, Parliament ratified a loan agreement with the European Bank for Reconstruction and Development. The loan of 300 million euros will be used for urgent purchases of natural gas and its storage in Romania, in order to provide a reliable reserve of energy resources during the cold season in case of a crisis and termination of Russian gas supplies. Meanwhile, the authorities should still focus on finding alternative gas suppliers. The other day Azerbaijan said that in the near future it plans to sign an energy security agreement with the EU to increase energy supplies to Europe. Theoretically, the existing infrastructure allows pumping Azerbaijani gas to Moldova, of course, if we are allowed to buy it and the demand in the European market will not make its price astronomical. So far, the prospects for gas supply are vague and it looks like we are in for a real test and hard times, given the 100% dependence on Russian gas and the electricity produced from it at the Kuchurgan power plant. The fact that our leadership is trying to get its act together is commendable. But in Moldovan reality, such alarmist appeals by the authorities to prepare for trouble should often be understood as a signal – run for your lives and rely solely on your own strength.