Page 9 - FSUOGM Week 48 2021

FSUOGM COMMENTARY FSUOGM

Gazprom an advantage, Turkey will be able to Moldova
leverage its new role as a key transit route in the But the most sensational of all Gazprom’s client
southern prong of Gazprom’s trident of delivery problems has been in Moldova where Gazprom
routes – southern, central and northern – for radically reduced supplies in September after
Russian gas heading to Europe through Turk- Chisinau’s gas contract expired before a new one
Stream. And Turkey’s state-owned Botas, and was agreed.
others, are likely to seek shorter-term deals and In the end Gazprom gave Moldova a month’s
reduced volumes in anticipation of the start-up extension, albeit at reduced volumes, while talks
within several years of the large gas field that Tur- continued, but the government declared an
key has discovered in the Black Sea. emergency as energy supplies ran low. The con-
tract with Gazprom was eventually amended
Poland and will the start at the end of this year to include
Poland has been especially hard hit by the crisis hub-based prices. Moldova also has big debts
as it recently shifted from oil indexation to hub- to Gazprom for unpaid gas, but a discussion on
based pricing in its contract with Gazprom fol- restructuring those has been put off until the
lowing a battle in court. New Year.
The supply contract of state-owned PGNiG After talks on extending its contract col-
with Gazprom was fully oil-indexed until 2019, lapsed in September, Moldova was forced to
when the Polish company won a Stockholm arbi- buy all its gas from Gazprom using hub-based
tration case against the Russian supplier. Gaz- pricing, which the improvised republic could
prom was required under the ruling to introduce ill afford. The two sides entered a new contract
hub-based pricing in the contract and pay $1.5bn beginning in November which restores partial
to make up for overcharging for gas in the past. oil indexation.
Now thanks to the surging prices on the TTF hub Moldova now says it is paying $450 per 1,000
it looks like Gazprom will be able to claw a lot of cubic metres for gas, versus $790 in October. The
that money back. Moldovan press has reported that the new con-
Ironically in late October, PGNiG asked Gaz- tract takes into account the prices of oil and gas
prom for a price cut which could suggest that it in the preceding nine months, with a 70-30 ratio
is seeking a return to oil indexation in light of between oil and gas price indexation.
current high market prices. Even these more favourable terms for sup-
“We’ve witnessed unprecedented increases in ply are proving a struggle for the country, the
natural gas prices across the European wholesale poorest in Europe. Even after agreeing on a new
market recently,” PGNiG CEO Pawel Majewski deal Moldova nearly fell at the first fence and
commented at the time. “This extraordinary sit- narrowly avoided having its gas supply cut off
uation provides a basis for renegotiating the price again on November 26 after scrambling to meet
terms on which we purchase gas under the Yamal a deadline for payment of supplies in October
contract. In our opinion, there is room for a and the first half of November. Gazprom had
reduction of the price of gas supplied to PGNiG. demanded payment on November 24 and Mol-
Conditions on the gas market have placed dova didn't have the money. But the Russian gas
considerable financial strain on PGNiG, Poland’s giant granted the government a two-day exten-
monopoly gas importer. The company’s core sion, and Chisinau came up with the $70mn in
earnings slumped 31% year on year in the first the end.
nine months of the year, as higher gas import While some media and politicians have
costs eroded the gains it made from gas sales in criticised Gazprom for using gas as a geopolit-
Europe. ical weapon in Moldova, other observers say

Week 48 01•December•2021 www. NEWSBASE .com P9