Expert: More Energy Risks for Moldova

Sergiu CEBAN

Some officials are still complacent in reiterating that they have “saved” Moldova from Gazprom and energy dependence on Russia. However, the latest expansion of the war zone in the Russian-Ukrainian conflict shows once again that such claims have very little to do with reality    

In early August, the European press published reassuring reports that Europe’s energy crisis was over, as gas, oil and electricity prices had fallen to pre-war levels. The improvement was attributed to political measures, increased supplies of liquefied natural gas, and the replacement of Russian energy resources with alternative ones. And then a bolt from the blue. Just late last week, gas prices in Europe rose by 4.8% and exceeded $450, setting a new high for this year. The September futures price at the TTF hub in the Netherlands rose to €40,312 per MWh. Experts predict further growth if uncertainty with the transit of Russian energy resources continues to grow. The main reason for such hikes, of course, was the situation around the Suja gas metering station, which fell under the control of the Ukrainian armed forces during a full scale military operation in the Kursk oblast. It should be noted that Russia is still one of the three largest suppliers of blue fuel to the European energy market, slightly behind Algeria. It is known that in the first half of 2024, the EU even increased its purchases of Russian pipeline gas by 24% amid a general decline in domestic consumption and a drop in LNG imports. In total, the EU received about 80 billion cubic meters of gas through pipelines in the first six months of the year (6% more than in the half of 2023), of which Russia’s share, according to various estimates, was about 15-16 billion. In addition, the spur through Ukraine via Suja is currently the only route for Russian gas supplies to Western and Central Europe. I would like to remind you that the transit through Ukrainian territory has been running at a reduced volume since May 2022, when the operator of the Ukrainian gas transport system announced its termination through the Sokhranivka station due to force majeure, namely the loss of control over the Novopskov compressor station in the Luhansk oblast. So far, pumping through Suja continues at the same volumes, and the warring parties have done nothing to disrupt the station’s operation. However, given that the hostilities here are clearly far from over, the risk of a sudden cessation of gas transit along the only remaining route, through which, by the way, blue fuel is also supplied to the left bank of the Dniester, is quite high. We will not dwell on possible military scenarios, but it is already clear that civilian objects are of secondary importance in any war, and the destruction of energy infrastructure is unfortunately quite common in this conflict. That the situation is serious was also confirmed by the warning from Ukraine to Moldova’s ministry of energy about the potential risk of disruptions in natural gas supplies due to military action. This prompted the Commission for Emergency Situations to take preventive measures to ensure the country’s energy security. The heightened alert regime will provide the relevant agencies with the necessary leverage to monitor and intervene promptly if necessary. All this, of course, looks baffling amid recurrent statements of the chief energy negotiator Andrei Spinu, who claims almost his own historical merit that Moldova has finally “escaped” from Gazprom and the Kremlin’s political blackmail and can feel “as safe and independent as possible”. It turns out that things are not that simple, and any fluctuations in the supply of Russian gas can still have the most direct impact on our country. This was obvious before, given that the left-bank MoldGRES produces electricity from Russian natural gas and then sells it to us. Therefore, any, even temporary, cessation of gas supplies will inevitably lead to major problems in Moldova’s energy supply. As they say, hope for the best, expect the worst. In an unfavorable scenario, neighboring Ukraine, which is already experiencing a shortage of electricity, is unlikely to provide us with much help. The only option left is Romania, which is also not doing well, since now the cost of electricity is rather high there, and in unfavorable circumstances it will surely become prohibitive. In addition, the experience of autumn 2022 shows that the power outage at MoldGRES is fraught with, among other things, technical failures, which can lead to the breakdown of energy nodes across entire regions. The energy minsiter Victor Parlicov has already informed that Romania is ready to support Moldova. It is clear that the minister is supposed to reassure the population, especially in the pre-election period, but the experts are not fools. They know that until the direct power transmission line “Vulcanesti-Chisinau” is completed, there is no reason to say that we are reliably protected from external factors and have access to alternative sources of supply. Recall, just a week ago, our government had so many plans. On the one hand we liberalized the market and let the Romanian operator OPCOM into Moldova, and on the other hand our Cabinet is going to introduce a monopoly on the electricity market, giving this status to two state-owned enterprises Energocom and Moldelectrica. Nobody explains anything, but if in the case of restoration of Metalferos monopoly everything was motivated by Moldova Steel Works, then in the case of electric power we would dare to assume that everything rests on MoldGRES. After all, it is necessary to conclude another contract with it by the end of the year, preferably without a tender and other players in this equation, for example, Romanian ones. It seems that the 45 measures to ensure security of energy supply in the coming winter, which the ministry of energy presented for public review by the end of July, will also have to be revised. Based on its forecasts, the ministry saw only two options for the development of events by 1 January 2025. The first (optimistic) envisages the supply of natural gas to the left bank via alternative routes, with neither Chisinau nor Kyiv preventing this. The second (negative) assumes that Gazprom will stop supplies, and then Chisinau will sell blue fuel from its reserves to Transnistria at market prices and subject to advance payment. But, to all appearances, our strategists failed to take into account all the factors (although, to be fair, Europe did not take them into account either), and now the package of anti-crisis measures has to be prepared based on non-linear scenarios. Despite the confident faces of our ministers and officials, alas, the stability of the energy sector, and, consequently, the socio-political stability in Moldova, still depend to a greater or lesser extent on Moscow and its principled decisions. No matter how the situation around the Suja gas measuring unit ends, the ruling regime would definitely like to avoid energy risks in the run-up to the autumn elections and the referendum. Especially considering that our population reacts acutely to any cataclysms and, especially, the government’s efforts “to break free from Russian energy dependence” for the third year already.