The energy security situation in Moldova for the nearest period seems rather stable. But the concentration of influential external and internal factors is expected to be so high that plunging into another crisis by the end of the year is more than a likely scenario
Western sanctions against Russian oil and gas remained the main factor affecting European and international energy markets in 2023. Supplies to the EU and the US were banned, while for the rest of the countries a “price limit” system of no more than $60 per barrel of oil was developed. At the same time, despite the EU’s declared “absolute rejection” of Russian blue fuel, it actually continued to flow to Europe, but in liquefied form. At some point, Russian LNG even began to oust American producers on continental markets, forcing the US to impose restrictions against one of its major producers in Russia in November.
Experts predict that this year may become a period of normalization in the European gas market, despite Europe’s further rejection of Russian fuel. At the same time, even the most ardent supporters of a break with Russia admit that it will be difficult to achieve its complete exclusion from the European energy equation. Among the reasons are the heterogeneous energy needs, as well as the very specific relations of different countries with Moscow.
As for Moldova, we are expected to get over this winter in much more predictable conditions, as the authorities have made sufficient reserves. However, in a few months, the government will have to think about where to buy gas at optimal prices and where to store it. So far, the relevant minister, Victor Parlicov, has announced bizarre ideas about expanding the geography of imports and even attempts to organize supplies by sea, using the liquefied gas terminal in Alexandroupolis, Greece.
On 29 December, the Commission for Emergency Situations obliged Moldovagaz JSC and Energocom JSC to conclude a contract for the supply of natural gas for January-April at an indicative price of 550 euros. Meanwhile, starting from January 2024, Russia’s Gazprom pumps gas to our country at a price of $380 per thousand cubic meters, compared to $831 in December. Perhaps that is why, despite all the previous statements of politicians about the intention to get off the Kremlin’s energy influence “once and for all”, Parlicov has recently claimed, as if nothing had happened, that Moldova may return to buying Russian gas from May if Gazprom offers a more favorable price.
This admission is all the more interesting because earlier our importers has once again started buying Russian oil products. According to ANRE data, this has been in place since the second quarter of last year. If in April-June the volume of supplies was more than 2 thousand tons, in the third quarter it was already about 9 thousand tons. As a result, the share of diesel fuel from the Russian Federation in the total volume of imports is up to almost 5% in July-September.
In addition to the decision to contract gas purchases for the first quarter of 2024, the Commission for Emergency Situations also provided Energocom JSC with the opportunity to sign power purchase agreements with suppliers for the period January-December without a tender. Electricity will be purchased mainly from MoldGRES at a price of 66 USD/MWh, from CHPs, from renewable energy sources, producers on the European market and, if necessary (to cover the daily shortage), on the Romanian exchange OPCOM. In addition, the CES obliged Moldovagaz JSC to supply the entire volume of Russian gas to the left bank of the Dniester, most of which is used for electricity generation at the MoldGRES.
Despite the relatively stable situation in the energy sector, we can talk about its sustainability for the medium term at most. Therefore, the government has a lot of plans to somehow restructure the sector and reduce its dependence on external factors. In addition to the ongoing epic with the construction of the Vulcanesti-Chisinau power transmission line, which, judging by the pace, is unlikely to be completed in 2025, the government has approved the construction of two new CHPs with a total capacity of 55 MW, with the financial support of the World Bank. They are expected to replace the former CHP-1, commissioned back in 1951, and will increase national electricity generation capacity.
Meanwhile, there is a feeling that all these tremendous projects are just bold statements to divert the public attention from the real situation and genuine plans. First of all, it draws attention to the fact that despite the contract with MoldGRES until the end of 2024, the authorization documentation for the Moldova Steel Works is issued only until October. Consequently, Chisinau expects the next turning point to occur already in autumn ahead of the elections and the onset of the new gas year from 1 October.
Apart from the presidential election, the concentration of external and internal factors, both energy and political, will increase the likelihood of sliding into another crisis, which might be an unpleasant surprise for the country’s current leadership.
Ukraine’s decision (not) to extend the transit of Russian gas, which may directly affect the process of generating cheap electricity at MoldGRES will be one of the key challenges. A recent article
already described Kyiv’s intention to play its own game in relation to Moldova in order to maintain its influence on our internal political processes and to strengthen the understanding of the Moldovan elites’ strong dependence on the neighboring country. On the eve of the New Year holidays, (most likely a fake) information spread in social networks that the Ukrainian authorities had imposed sanctions against Moldovagaz JSC, thus allegedly limiting the possibilities for maneuver and purchase of energy carriers on the Russian-Ukrainian border. Of course, we can, as usual, attribute this deception to the Kremlin’s plots, but we should not rule out the possibility that Kyiv is signaling us about possible scenarios.
At the same time, an interesting plot is unfolding around the Romanian OPCOM, which, through its subsidiary, will soon become the operator of Moldova’s electricity market. As a result, the markets of the two countries will be united, and this, in turn, will open access for Moldovan operators to the Romanian energy exchange. It is easy to guess who exactly in our country owns generating capacities, as well as the opportunity to offer low prices to Romanian and European consumers.
It seems thar this year we will face quite fascinating and exciting developments in the energy sector, which seem absolutely utopian and irrational today, but tomorrow may become something real and commonplace.