Page 18 - FSUOGM Week 01 2021

FSUOGM PIPELINES & TRANSPORT FSUOGM

Gazprom strikes short-term supply

deals with Armenia, Moldova

RUSSIA RUSSIA’S Gazprom has agreed short-term Energy bills are political sensitive, and so
extensions to its gas supply contracts with Arme- authorities in Yerevan will be keen to secure a
The extensions give nia and Moldova, providing more time to nego- reduction in prices. The government is currently
negotiators extra time tiate long-term agreements. facing mass protests over the November cease-
to agree long-term The state gas exporter has extended its con- fire deal with Azerbaijan, under which it ceded
arrangements. tract with Armenia for deliveries until the end territory in the disputed Nagorno-Karabakh
of March. The contract had been due to expire at region.
the end of December. Gazprom agreed a longer contract exten-
Gazprom has a monopoly over gas supplies sion of one year with Moldovan gas distributor
in Armenia, with deliveries amounting to nearly Moldovagaz, until the end of 2021. Moldovan
2.2bn cubic metres in 2019. Its supply contract is authorities have said the country will pay $120-
with Gazprom Armenia, a 100%-owned subsid- 122 per 1,000 cubic metres for gas in the first
iary that distributes gas in the South Caucasus quarter.
country. But Armenian authorities also have a Gazprom is also Moldova's sole supplier,
say in price negotiations. making deliveries under a 2008 contract
The two sides’ previous long-term contract under which prices are indexed to inter-
ran between 2014 and 2019, after which they national oil prices. The contract has been
agreed a one-year deal. Gazprom has sold its gas repeatedly extended, typically on an annual
at a fixed price of $165 per 1,000 cubic metres basis.
since the start of 2019, even though international Gazprom and Moldovagaz began negotiating
gas prices have seen a significant decline over the a new three-year contract last summer, with the
past two years because of higher LNG produc- Moldovan side seeking a deal that bases prices
tion and a slowdown in Asian demand growth. not only on oil benchmarks but also on gas spot
As such, Armenian authorities have called for market prices. The two sides agreed on the one-
prices to better reflect market trends. year extension after failing to make a break-
Armenia’s government confirmed on Decem- through in talks.
ber 31 that Russia would continue supplying gas Gazprom is Moldovagaz’s majority owner
at the $165 price over the next three months. Gaz- with a 51% interest, while the Moldovan govern-
prom Armenia sells these volumes to consumers ment has 35% and authorities in the breakaway
at a considerably higher price of $285. Transnistria region hold 15%.™

P18 www. NEWSBASE .com Week 01 06•January•2021