Effects of the Moldovan Government’s Gas Experiments

Anton SVET

The government is actively accumulating gas, considering the coming winter as a critical moment to eliminate energy dependence on Moscow

In October, the consumption of Russian gas in the country more than halved compared to the same period last year. According to official data provided by Moldovagaz, last month (excluding the Transdniestrian region) only 29.6 million cubic meters of the 171 million cubic meters supplied by Gazprom were consumed. In November, the government has reserved 102 million cubic meters at the expense of reduced gas supplies to the left bank, which in conditions of economy makes it possible to form significant reserves – if that is the task. Such a radical decrease in consumption was achieved through the transfer of the largest district heating plants in Chisinau and Balti to an alternative raw material, as well as mass disconnection of the so-called insolvent consumers. Since the beginning of the year the cost of a cubic meter of gas for the population has increased by 500% (which has no close analogues in the country’s history), becoming unaffordable for many citizens even taking into account the compensations provided by the government. None of the government agencies provide relevant statistics on consumer outages, but judging by the popular protests and the emerging economy, the situation is unprecedented. On the other hand, the government has already managed to build up reserves (if it has full access to them) allowing us to survive the winter more or less easily. Thus, over 150 “spare” million cubic meters of gas may be accumulated in the underground gas storages in Ukraine and directly in the main gas pipelines, and this volume may grow to 200 million cubic meters by the end of the month. If the needs of the industrial Transdniestrian region, which one way or another will have to be taken care of by Gazprom and local administration, are not taken into account, the available reserves are enough to cover 3-4 months of consumption. As a last resort, alternative routes have been preliminarily agreed upon, using which small volumes can be purchased if necessary. On November 20, the issue of Moldovagaz’s next tranche in favor of Gazprom will be brought to a head. We are talking about payment for supplies for November and advance payment for the first winter month. Despite the decrease in the volume of supplies and the costs a bit lower than before, the source to cover these costs is not clear yet. Moldovagaz will not have this money on time, including due to the fact that the population pays for gas mainly at the end of the month. Even in October we had to take a loan from Energocom secured by the company’s property. The EU and the USA loans and grants, recently received and planned for the future, are intended to “ensure Moldova’s energy independence”, i.e. it is unlikely that they can be used to purchase Russian gas. The government is now more concerned about its own skin amid a scandal involving the leaking of officials’ personal correspondence, and it remains silent about the next gas payment. However, according to our insiders, the country’s leadership is seriously considering the scenario of refusing to pay Gazprom for the next month. The temptation to loudly slam the door and end the gas dependence on Moscow is extremely great. Such a move is implied within the geopolitical logic, as a complement to the serious success of Ukraine and the Western states on the frontline of confrontation with Russia. The formal reason for Chisinau’s demarche could be a statement of unmotivated violation of Gazprom’s contractual obligations to Moldovagaz in the form of reduced supplies in October-November. Previously, Ukraine has frequently confirmed its readiness to transit volumes of Russian gas as per the contract signed between Gazprom and Moldovagaz until 2026. In his Telegram channel, Vadim Ceban, the head of our company, hints at a possible replacement of the supplier, provided that the new supplier offers more favorable commercial terms. His stance as Moldovagaz’s chief has changed considerably over the past months due to his personal interest in cooperating with the government to ensure a better chance to compete for the Gagauz Bashkan post in the upcoming elections. Meanwhile, the left bank of Nistru River expresses doubts about the availability of gas volumes that Chisinau has saved. It is clear that Moldova has no proper capacities to store the blue fuel. It is a big question whether the gas is in Ukraine at all and under what conditions it is kept there. Perhaps, part of it was indeed pumped to Ukraine or Romania, and the funds received were used to acquire alternative sources of raw materials (fuel oil for CHP) or expensive electricity in Romania. One way or another, any drastic decisions by the government, if taken, will not account for the interests of the left-bank Dniester consumers whose industry and domestic consumption are much more dependent on Russian gas. Many industrial enterprises in the region have already shut down. That said, Transdniestria enjoys its own electricity generation, including coal reserves enough to ensure the two-month operation of Moldavskaia GRES to cover domestic needs. The region’s authorities know that Chisinau getting rid of gas dependence on Moscow will lead to problems and shortages, and so they can use the MGRES resources to complicate electricity transit. In any case, the energy-gas saga is close to the moment of truth. It was for a reason that PAS deputy Dumitru Alaiba bravely promised to stop buying Russian gas as early as next year, though he eventually backed down. The governmental experiments have already resulted in unaffordable tariffs, deficits and impoverishment for the Moldovan population. Most likely, the authorities will miss the chance to rectify the situation in the very near future.