Hot Gas Bills: How Moldova Purchased an Excessive Amount of Expensive Gas in 2023

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Moldovan citizens entered the new year with high tariffs for natural gas, although its price on international exchanges dropped significantly. Last week, the futures price on the Amsterdam exchange fell to $320 per 1,000 cubic meters, but Moldovan state-owned Energocom still sells the blue fuel to Moldovagaz at $605. The financial burden due to the high cost of gas has lasted since 2022. From May 2022 to January 2023, Energocom purchased almost 600 million cubic meters of gas at an average price of $1024. This volume of fuel was supposed to cover the consumption of the right bank of the Dniester during the cold season if Russia’s Gazprom stopped supplying Moldova, as it had threatened to do. However, the authorities’ estimates turned out to be wrong. Expensive gas was used by the right bank until autumn 2023. Energy Minister Victor Parlicov said that in May 2023 we had more than 200 million cubic meters of gas left, previously purchased at much higher prices. According to Octavian Calmic, former director of ANRE, unprofessional management and lack of strategic vision of those who were involved in gas procurement are to blame. “If the government decided to build gas reserves of 22.8 million cubic meters in 2022, how did we receive a volume of 600 million cubic meters? This is the key question. How can this be justified? Of course, it was necessary to build reserves because there was uncertainty in the international, regional and local market. But so excessive purchases, we did not use all the expensive gas for 2023,” Calmic expressed bewilderment. In turn, Infrastructure Minister Andrei Spinu, who was in charge of blue fuel purchases at the time, believes that the main reason for this situation was the uncertainty on the gas market. He also recalled that in 2022, there was a risk of a complete cessation of fuel supplies by Russia’s Gazprom. According to him, under these conditions, the purchased volumes were vital to successfully outlive the autumn-winter period. Nevertheless, the government’s decision on measures to be taken in the case of a reduction in supplies by Gazprom stated the need to purchase only 480 million cubic meters of gas, not 600. According to an analysis by energy expert Sergiu Tofilat, the excess volumes of expensive gas cost Moldova about $34 million. “If we talk about the excess gas and the damage caused, we need to compare this with something. We can make a comparison only on the basis of the price at which Energocom bought gas this summer - $420. The difference is $304 per thousand cubic meters, and if we multiply that by the total quantity, we get about $33.9 million. This is how much we actually overpaid for the excess gas purchased in January 2023,” Tofilat explained. The excess volume of blue fuel purchased for one winter was used throughout last year. At the beginning of the summer, Infrastructure Minister Andrei Spinu assured that the “expensive gas” would run out in autumn 2023.