Page 7 - EurOil Week 43 2021

EurOil COMMENTARY EurOil

He called Serbia’s decision to build the Balkan needed by the country that is negotiating a new
Stream gas pipeline “very smart”, saying it supplies multi-annual contract.
the country with natural gas at an affordable price. Moldova’s Commission for Exceptional Sit-
uations (CSE) declared a state of alert related to
Hungary’s Gazprom deal angers Ukraine the natural gas market on October 13 and the
From Serbia, the pipeline continues to Hungary, government mandated the country’s central-
and the interconnector between the two coun- ised electricity supply company Energocom to
tries was officially opened on September 30. The negotiate natural gas imports from Ukraine and
first commercial deliveries of gas to Hungary Romania, Deputy PM Andrei Spinu announced.
through the line began the following day, the first Romania came to the rescue a week later,
day of the new gas year and the day Hungary’s started limited exports of gas to Moldovad,
new, long-term gas delivery contract with Russia Moldovan prime minister Natalia Gavrilita
came into effect. announced in a press conference on the state
The deal incensed Kyiv as this is exactly what of alert triggered by the crisis on the natural gas
Ukraine was afraid of: previously gas delivered to market.
Hungary from Russia went via Ukraine, but now Negotiating the new contract with Gazprom
it was entirely cut out of the loop. has been the first major test for the new west-
Ukraine’s national gas company Naftogaz and ern-leaning government headed by Moldovan
the pipeline operator Gas Transmission System president Maia Sandu, who was elected early this
Operator of Ukraine (GTSOU) claimed on Octo- year on a pro-west, anti-corruption platform.
ber 1 that the deal by Russia’s Gazprom to supply Under the bridge arrangement with Gaz-
Hungary and reduce gas supplies to Ukraine was prom, while talks on a new long-term contract
the “use of gas as a weapon”, and demanded the US continue, valid for only October, Moldova
and EU impose sanctions as promised. receives 54mn cubic metres of gas, which is
“Whether Germany acknowledges it or not, only 67% of the 80mn cubic metres the coun-
Russia has aimed its energy weapon at all of the try, not including separatist Transnistria, needs,
EU. The threats to punish Russia at some future announced Moldova’s incumbent natural gas
date no longer suffice. The very credibility of the transport and distribution company Moldo-
Western deterrents is on the line and the time vagaz, controlled by Gazprom, with the state as a
to respond is now,” Ukraine’s national gas trans- major shareholder.
port company said in tweet from its corporate Supplies falling below consumption resulted
account the same day. in lower pressure in the gas transport system, the
Under the agreement, Gazprom will deliver company said.
3.5bcm of the 4.5bcm of gas it gets from Russia Furthermore, the price paid by Moldova in
annually under the contract through the Hun- October will be $790 per 1,000 cubic metres —
garian-Serbian interconnector. The total annual six times more than in Q1 this year.
delivery capacity of the pipeline is 8.5bcm. 32% Moldovagaz invited its consumers to take
of the first year’s supply has been already booked. measures to cut their consumption, specifically
Ukraine complained to the European Com- by switching to alternative resources (such as
mission about Hungary’s new Russian gas heating oil) or deferring industrial operations
contract; previously Hungary’s Russian gas such as refining sugar beet.
was delivered through the Friendship pipeline Moldova’s main power generation unit, con-
passing through Ukraine. However, this got trolled by the separatists in Transnistria and typ-
short shrift from Hungarian Minister of Foreign ically burning natural gas (which it does not pay
Affairs Peter Szijjarto who said Hungary consid- for), is partly burning coal these days. The smaller
ers the move an “attack on its sovereignty”. units, on the Moldova proper territory (Termoe-
“Neither Ukraine nor any other country has lectrica and CET Nord) are considering switching
any business concerning with whom, on what to heating oil but such a move takes time.
and in which manner Hungary reaches agree- Officials from Chisinau are understood to
ments,” he added. have appealed to both Moscow and Brussels
Croatia started receiving gas supplies via the for support to help Europe’s poorest country
pipeline the same day, after four years earlier, in through the energy crisis.
September 2017, it signed a 10-year gas delivery Meanwhile, states in the region are diversi-
contract with Gazprom, under which the Rus- fying their gas supply routes, thereby reducing
sian company will deliver 1bcm a year to Croa- their dependence on Russia as a supplier. On
tia’s Prvo Plinarsko Društvo. the same day as Serbia opened its section of Bal-
kan Stream, Bulgaria started receiving gas from
Left off-stream Azerbaijan via the Trans-Adriatic Pipeline that
Other countries in the region, especially those also runs through Greece and Albania before
without long-term supply agreements, are crossing the Adriatic to Italy. Also around the
struggling. turn of the year, Croatia put its floating lique-
Moldova, for example, has yet to agree to a fied gas (LNG) terminal near the island of Krk
new long-term contract with Russia after the into operation. As well as diversifying its own
previous long-term contract expired on Sep- sources, Croatia also aims to become a hub to
tember 30. The country’s natural gas transport distribute LNG to the region. Romania is also
system and the power generation sector came seeking to establish itself as a supplier to the
under extreme pressure after Gazprom agreed region, once new capacity in the offshore Black
to temporarily deliver only two-thirds of the gas Sea comes online. ™

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