Is It a Success of Moldovan Energy Diplomacy?

Sergiu CEBAN

Apparently, Moldova is the first country in Europe to agree with Ukraine on transit supplies of Russian gas

With summer coming, the energy pulse in Europe has increased - mainly due to the need to prepare for the next heating season and to stock up on gas at a favorable price. As is well known, the European energy sector has been in a prolonged crisis and restructuring for the past few years due to the desire of the EU countries to minimize and then completely abandon Russian energy resources. Although, at first glance, the acute phase of the crisis has passed, the risks of being left without gas are still serious. Otherwise, our government would not have recently decided to increase the norms for the volume of compulsory reserves - now responsible institutions are obliged to form them for 15% of the average annual consumption (149.5 million cubic meters). More than 30% (47.1 million) of this volume will be reserves for emergencies, which is equivalent to ten days of consumption in winter. This reserve will have to be purchased by 1 October of each calendar year and stored in EU countries or in Energy Community member states. We currently keep half of our reserves in Romania and the other half in Ukraine. According to the decree of the National Commission for Emergency Situations, in order to ensure energy security in 2022-2023, Moldovagaz was obliged to purchase gas from the state-owned company Energocom. At the end of April, Moldovagaz returned to market-based purchasing mechanisms, but the tender was again won by Energocom. It is important to note that last week Energocom purchased for the first time a trial batch of natural gas from Balkan Gas Hub in Bulgaria. A little earlier, in April, our state-owned company purchased a small batch of LNG from the USA in Greece. Thus, Energocom is testing ways to acquire energy resources from different sources. Moldovagaz is also not lagging behind and expanding its logistical capabilities, having signed a cooperation agreement with a Greek company recently for uninterrupted natural gas supplies to Moldova via the Trans-Balkan corridor. All this activity of our main energy companies seems to be related to overcautiousness in case the transit of gas through the Ukrainian GTS stops after 2025. Judging by the statements, no one is going to make any concessions in this issue, and the situation is slowly approaching the termination of the agreement. European Commissioner for Energy Kadri Simson said the day before that the European Union had more than two years to prepare for this moment, and therefore Brussels has no plans to ask Kyiv to extend any agreements with Moscow. And this statement was made despite the fact that countries such as Austria, Slovakia and the Czech Republic are still heavily dependent on Russian gas supplies via Ukraine. In addition, the EU has already started discussing the 14th package of anti-Russian sanctions, which is expected to include a ban on transshipment of gas from Russia to European ports and imports of Russian LNG. However, Hungary’s example proves the possibility to eliminate dependence on Ukrainian transit and receive Russian gas via Turkish Stream. Back in 2016, Hungary, Slovakia, Romania, Bulgaria and Greece announced the creation of the Vertical Corridor project, which, by the way, will be joined by Moldova and Ukraine in 2024. And while the initial idea was to diversify sources and supply Central European states with the same American LNG, the end result was a banal rearrangement of the route for Russian gas. For instance, in the second half of May, supplies through the European string of Turkish Stream have reached a record level of overcapacity due to the fact that Hungary, Bulgaria and Romania are actively pumping gas into storage facilities before the heating season. Despite LNG imports from the US, Greece has also so far favored fuel from Gazprom. By the way, Bulgaria nominally gave up direct purchases from the Russian monopoly back in 2022, so the process goes through European traders. While Moldovagaz and Energocom are working on alternative logistic routes, Energy Minister Victor Parlicov reports that an informal agreement has been reached with Ukraine to continue supplying gas to the Transnistrian region even after the transit contract with Gazprom expires at the end of the year. According to the agreement, the new route will go through the Turkish Stream and then by reverse through the Trans-Balkan corridor. All additional costs associated with the delivery will be borne solely by Gazprom and the Tiraspol authorities. Obviously, such agreements of principle have been impossible without the involvement of Washington, which closely monitors Moldova’s energy security. And the fact that Parlicov’s statement was made on the eve of the visit of Antony Blinken, the head of the Department of State, to Chisinau is an additional confirmation. However, we should not ignore Blinken’s statements that he brought to Moldova “a reliable package of energy support”, which apparently includes both money and concrete projects. In particular, it is expected that electricity batteries will be installed near Chisinau in the village of Braila to stabilize the system in case of need. In addition to the Russian-Ukrainian transit contract, the contract for the purchase of electricity from MoldGRES will expire by the end of the year. And while there are options for gas supplies to deal with critical scenarios, given the state and trends around generating capacities in neighboring Ukraine, stable electricity supplies should be considered well in advance. As you can see, preparations are already underway. For example, in June, Energocom will purchase more than 90% of the electricity needed for the right bank from MoldGRES. The diligent work to ensure uninterrupted gas supplies to Transnistria can certainly be called a concern for our citizens on the left bank. After all, the absence of a contract with MoldGRES will harm only the social situation of region’s inhabitants. However, such inclusion of Chisinau in the decision points to the great interest of the right bank as well. The price and stability of supplies is something that is extremely necessary for our authorities in the run-up to the presidential elections and the parliamentary campaign that will follow. It is possible that Chisinau and Tiraspol will not delay negotiations on a long-term agreement, but will agree on everything by the beginning of autumn in order to remove all energy irritants. Following all the processes, we can see how Moldova is forced to maneuver between the Western desire to achieve energy independence from Russia and the objective reality, which, by and large, excludes the possibility of solving such a complex task. Nevertheless, it is worth noting the success of Moldovan energy diplomacy. Our country is actually the first in Europe to agree with Kyiv on unimpeded transit of Russian gas in case of non-renewal of the Russian-Ukrainian agreement.