Page 5 - FSUOGM Week 50 2019

FSUOGM PIPELINES & TRANSPORT FSUOGM
EU backs Moldova for emergency gas
MOLDOVA
The letter of credit covers Moldovan gas purchases if its Russian supplies via Ukraine are disrupted.
THE European Bank for Reconstruction and Development (EBRD) has issued a $50mn letter of credit (l/c) to Moldova in order to safeguard the country against winter gas shortages, it announced on December 11.
Moldova gets all its gas – around 3bn cubic metres per year – from Russia via Ukraine. But its supplies could be disrupted if Russia’s Gaz- prom and Ukraine’s Naftogaz cannot agree terms for continuing gas transit after their current con- tract expires on December 31, 2019.
The EBRD’s pledge covers the purchase by Moldovan state importer Energocom of up to 0.4 bcm of gas from Naftogaz in the event of an emergency, enough to cover one month of typ- ical winter supply. Naftogaz will acquire the gas from European suppliers in open tenders.
“The financial mechanism will complete the set of options Moldova has at its disposal for sup- plying gas to consumers, in case of an emergency beyond the government’s control,” Moldovan PM Ion Chicu explained. “We are grateful to the EBRD for giving us a hand and I am certain the bank will increase the number of projects in Moldova in the near future.”
Under the l/c’s terms, Energocom will be able to delay payment to Naftogaz by up to 180 days, givingitenoughtimetoraisefundsfromitscus- tomers in Moldova.
With a little over two weeks to go before the contract runs out, Russia and Ukraine have yet to make serious progress in striking a new
deal. Naftogaz wants a new long-term contract signed between Gazprom and a newly formed independent grid operator, set to start working on January 1; Gazprom wants the existing deal extended, with a short duration.
In a statement on December 16, Naftogaz quashed rumours in the Russian press that a preliminary agreement had been reached.
Moldova’s position is precarious. Not only does it rely on Russia for all of its gas needs, but that gas is used as fuel at the country’s largest power station, a 2,500-MW Russian-owned plant in the breakaway region of Transnistria that supplies most of its electricity.
Without a Ukrainian transit deal in place, Moldova is having difficulty finalising its own supply contract with Gazprom, also expiring at the end of this year. Its national gas company Moldovagaz agreed in principle on the extension with Gazprom in November, but they still need to settle on a delivery route.
The EBRD’s support apparently came with a caveat, with the bank stating that as part of the deal, Moldova had “committed to gas sector reforms such as developing secondary legislation to liberalise the gas market and diversify sources of supply and implementing an action plan to improvecorporategovernanceofEnergocom.”
Moldova’s gas market remains highly monopolised, with all major activities under the control of Moldovagaz, whose main owner is Gazprom.™
Week 50 18•December•2019 w w w . N E W S B A S E . c o m P5