Expert: There Is Too Much Politics Around Russian Gas Supplies to Moldova

Anton SVET

At the beginning of October, there was renewed talk about possible interruptions of Russian gas supplies. Gazprom actually issued an ultimatum to Moldova with a deadline of October 20. Meanwhile, Chisinau is attacking with counter accusations and pretending to have found an alternative. But there is much more political calculation than economics and common sense in all these murky moves

On October 4, PJSC Gazprom issued an official announcement in which it unexpectedly threatened to stop Russian natural gas supplies to Moldova after October 20. The reasons cited are delays in settling the historical debt of the right bank for the blue fuel purchased after 2014, as well as (to a lesser extent) regular violations of the payment deadlines established in the contract. The Russian company recalled that it had previously perceived the requests of the Moldovan side with understanding, counting on “long-term sustainable cooperation”. The government and Moldovagaz promptly produced a counter-response. Gazprom was accused of reducing deliveries by 30% compared to the contracted ones (the Russians explain it by the refusal of Ukrainian Naftogaz to provide transportation services in full). At the same time, the Cabinet of Ministers has confirmed that it makes every effort to pay for the gas supplied in full and on time, and that occasional delays are solely due to high prices. As for the historical debt accumulation, Deputy Prime Minister Andrei Spinu redirected the accusation to Gazprom which is the majority shareholder of Moldovagaz SA. He said that the government with a minority stake had less influence on decision-making and authority than functionaries in Russia. Besides all this, Spinu spoke about the negotiations with Romania regarding gas supplies through the Iasi-Ungheni-Chisinau gas pipeline. Their volumes, limited by the capacity of the pipe, can reach 5 million cubic meters per day. Of course, this is clearly not enough for the winter period. And even the transition of some power generating enterprises to fuel oil, reducing consumption and intensive procurement of firewood will not solve the problem. In addition, Chisinau is forced to think about the supply of blue fuel to the left bank of the Dniester, making sure that it will be uninterrupted, but under control. Otherwise, the country risks being left without electricity (meanwhile, the contract has been signed until October 31 and is secured by the extension of environmental approvals for the Moldova Steel Works). It has already been announced that the average cost of electricity tariffs will increase by about 1 leu per kilowatt/hour, but it will increase significantly if electricity has to be 100% purchased from neighboring countries. However, there is little doubt that the “gas from Romania” will in any case be Russian – coming from the bottom of the Black Sea through the TurkStream. Romania does not have its own gas in any significant volumes. The development of offshore fields is a distant prospect, it will require enormous time and resources, as well as, probably, demining of the sea area. It will be extremely difficult to get the blue fuel from Poland and Germany, countries with powerful terminals for receiving liquefied natural gas. The Yamal-Europe pipeline, which runs through Poland, has been blocked for about a year for political reasons. The sabotage of both Nord Streams effectively leaves the German economy, the largest and most dependent on Russian hydrocarbons, without gas from Russia. Thus, all the volumes that can be accumulated on foreign markets, including the U.S., are predictably used by Germany for its own production. As a result, if Russian gas is transited through Romania, it will still require signing the contract between Moldovagaz JSC and Gazprom PJSC. Therefore, the question of Moscow's goodwill or lack thereof will emerge again, as well as the price problem associated with the tremendous extension of the transportation leg and the increase in the number of transit countries involved. Willy-nilly, we will return to what we have now: namely, dependence on no-alternative supplies of Russian natural gas, at least in the mid-term. So right now, instead of useless bickering, it would be better to sit down at the negotiating table and work things out pragmatically. Otherwise, the disruption could result from purely political reasons and lead to unjustified problems for businesses and the population. This, of course, will one way or another require an adequate response from Moscow, which may appear to be difficult. Russia is still using gas supplies as a political tool. Gazprom’s recent statement is largely an attempt to send a message to Chisinau that the Kremlin is dissatisfied with the ruling party’s course and, at the same time, to fuel protest sentiments. This assumption is confirmed by the most bizarre invitation of the Sor party delegates to the State Duma, allegedly to discuss gas cooperation. Moscow repeatedly made similar mistakes before – for example, when in the midst of the coronavirus pandemic it agreed to supply the Sputnik V vaccine to Ukraine only through Viktor Medvedchuk. The outcome of such straight-line tactics in the Ukrainian case is disappointing. The situation in Moldova will hardly be any different. On the other hand, the Kremlin’s irritation at PAS’s Ukrainian-centric policy and constant anti-Russian hysterics and demarches is also quite understandable. Moscow cannot but be troubled by attempts to speculate about gas supply problems in Transdniestria and its overall viability, including the safety of Russian peacekeepers and Russian military property stationed there. For this reason, the unprofessional dancing around the gas issue, with its negative impact on the population, is unlikely to stop anytime soon. And, therefore, the likelihood that one of the hypothetical deadlines will become fatal will only grow.