Page 6 - FSUOGM Week 43 2021

FSUOGM COMMENTARY FSUOGM

Severe energy crisis

looms in Moldova

Moldova stands on the brink of a severe energy crisis after a cut in supplies from Gazprom

MOLDOVA MOLDOVA stands on the brink of a severe the government was doing all it could to ensure
energy crisis, with Russia’s Gazprom having Moldova’s energy security. It has approved the
WHAT: warned the former Soviet state that it could cut emergency purchase of gas from other sources,
Moldova has declared a off gas supplies at the start of next month unless and has released emergency reserves of fuel oil
state of emergency amid a contract is signed and bills are paid. to provide a source of heating during the cold
gas shortages. Moldova, a country of 2.6mn people, gets all winter weather.
its gas from Russia. But its long-term contract The government has even reached out to
WHY: with Gazprom expired at the end of Septem- authorities in the breakaway region of Transn-
Gazprom is sending less ber. A one-month agreement covering October istria, to obtain assurances that the 2,520-MW
gas and charging more, shipments was reached mere hours before the Kurchurgan gas-fired power plant will continue
following the expiry of a previous contract expired, which, according to supplying electricity to the rest of the country in
supply contract at the gas transmission system operator (GTSO) Mol- the agreed amounts.
end of September. dovagaz, means that Gazprom could not book Talks between Russia and Moldova on agree-
sufficient gas transit capacity through Ukraine ing a new contract have failed to make progress,
WHAT NEXT: during the month. As such, the Russian gas sup- and Gazprom warned on October 23 that sup-
Moldova needs to secure plier is only sending enough gas to cover a third plies to the country could cease completely at the
alternative sources of of demand, and Moldova lacks any gas storage start of November unless a new agreement is in
supply. But the country capacity. place and Chisinau has paid its bills. The com-
will struggle to secure Moldova is also paying a much higher price pany estimates that Moldova’s government has
much gas to ease the for gas, as the current short-term contract is racked up a debt of $709mn for supplies so far.
current crisis. linked to hub prices rather than being oil-in- The sticking point in negotiations is of course
dexed. The country is therefore paying $790 per price. For years, Moldova has been pushing to
1,000 cubic metres for supplies in October, or pay a hub-based price for the Russian gas it buys.
almost five times more than it paid in 2020. Hub-based prices have typically been lower than
The situation took a turn for the worse on those under Gazprom’s oil-indexed contracts
October 22, when the Moldovan government over the last decade, owing to a glut in global
declared a 30-day state of emergency over the gas LNG supply. But the situation has reversed
shortages. Prime Minister Natalia Gavrilita said this year, and Moldova is seeking a return to oil

P6 www. NEWSBASE .com Week 43 27•October•2021