Is It a Checkmate to the Russian Gas Monopoly?

Cristian RUSSU

Moldovan authorities brace themselves for an “illegal takeover” of a Gazprom subsidiary’s assets planned for early autumn

According to the authorities’ plans, the first decade of September is to be a turning point in the Moldovagaz separation saga as required by the so-called Third Energy Package of the EU. Recall, it aims at eliminating Russia’s influence on the markets in the EU members and now the accession candidates. A year ago, the ruling party legally limited the period for operation of the Moldovan subsidiary of Gazprom in the former conditions. Thus, Moldovagaz has to carry out internal reorganization and withdraw from its subordination the subdivision that controls the entire national gas distribution system until September 10. This is Moldovatransgaz, which is to become an “independent transmission operator” on the gas market operating under ANRE rules. For years, Chisinau has been willing to take the transmission and distribution networks out of Gazprom’s control in order to free its hands completely in this sector. Of course, we cannot say that the Russian gas monopoly has effectively managed its property in Moldova for the past six months. At the same time, by the decisions of the Commission on Emergency Situations, Moldovagaz has to sell gas from European traders through the state enterprise Energocom. The same scheme of deliveries under the credit of the European Bank for Reconstruction and Development, which has led to impoverishment of ordinary gas consumers and almost resulted in assets’ seizure and bankruptcy of “Moldovagaz”. Nevertheless, the management of the company has already confirmed that it will work according to this plan until the end of the year and that there will be no purchases from Gazprom to the right bank. Nor will there be any afterwards, as negotiators make commitments to extend this supply scheme to the first quarter of 2024. In fact, the Russian monopoly has only the distribution grid segment and final consumers on the right bank. Even then, by regulatory decisions, some of them have switched to other suppliers that provide energy sources at flexible price terms, based on exchange quotations. In spring, there were about 70 consumers, to whom little-known figures, like Npc, Sd-Energy, Transautogaz, N-Gaz and Rotalingaz sold gas at 11-14 lei per thousand cubic meters, while the tariff for others was 29.24 lei. However, even in this reduced format, the authorities do not want to see a Russian presence on the gas market. The objective is probably to report formally to the European partners on meeting the requirements of the Third Energy Package and not to be bound by any political commitments with the Russian partners. Hence, there are overt threats to take away the license from Moldovagaz and appoint a new owner as operator of the natural gas transmission system, which will be independent of the Gazprom subsidiary. The officials believe Vestmoldtransgaz, which manages the Iasi-Ungheni-Chisinau gas pipeline and already has all the permits and certification from the national regulator, would be a perfect choice for the role of operator. Gazprom either did not take these threats seriously or acted unwittingly in the hope to maintain a kind of status quo at least until the end of 2024, when the contract on gas transit through Ukraine expires (or even earlier, if the EU imposes sanctions on direct gas supplies from Russia). One way or another, the founders of Moldovagaz will not meet the new requirements for the operation of the gas market by 10 September. The government has already been notified of this and has therefore decided to proceed. New regulations are introduced into the current legislation, prescribing the procedures for revoking a license for non-compliance with the separation requirements, as well as a mechanism for the operator’s functioning to whom the gas transmission networks will be handed over for management. Ten days before the certification deadline, i.e., by September 1, Moldovagaz and other related companies, owners of gas networks, in this case Tiraspoltransgas and Moldovatransgas, will have to submit signed contracts with the new licensed supplier for at least five years in order to avoid vagueness in the gas market. In the absence of signed contracts, the national regulator will have to issue an act transferring the whole gas transmission system to the full management of the new license holder. In addition, the owner and former licensee will have to implement measures in favor of the new management company. The authorities have also provided for the possibility for Russian owners to challenge such decisions (or actually raider seizures) in court. The Administrative Code will be amended, according to which the court will not even be able to suspend the execution of the contested act adopted by ANRE in this particular case. Previously, only the National Bank was endowed with such immunity from court decisions, and only as an exceptional measure to stabilize the banking system after the ‘theft of a billion’. In terms of legal correctness and compliance of such decisions with international norms, everything can be very specific. But who in the current regional setting would condemn our leadership for legal nihilism towards a country that is labeled ‘aggressor’ in the West? In case the described scenario materializes, there will be no good options for Russia, and even gas supply to the left bank of the Dniester will be questionable. For now, the main factor that prevents Chisinau from seriously considering cessation of gas supplies to Tiraspol is its almost 100% dependence on imported electricity from the Moldovan SRPP. On the other hand, the current three-month contract for the Transnistrian electricity supplies expires exactly on September 1. Here we should add that in the past few days, the previously observed shortage of electricity in the Ukrainian regions bordering Moldova is no longer so acute. Reverse deliveries of Ukrainian electricity to Romania through our country are already in place. Should the energy infrastructure in the neighboring country continue to recover at the same pace in the next few months, the authorities may again be tempted to repeat the practice of complete refusal from the Transnistrian electricity. True, the price is still an issue – no one can compete in terms of price with the MGRES in current conditions. It should also be taken into account that by the end of August Moldova plans to complete the purchase of gas on the EU market in the volumes necessary to go through the 2023-2024 heating period. Added to these volumes may be the gas stocks, which can be sent to the MGRES to generate electricity for the right bank. In any case, the negotiating position of our country will strengthen, and Russia will have fewer and fewer opportunities to retain its previous hold over the Moldovan energy sector.