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Oct 25, 2021
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Gas impasse. What will Moldova’s unwillingness to pay for fuel lead to?

In a month, Moldova may be left without Russian gas. Negotiations between Moscow and Chisinau ended in vain: the Russian Federation offered the republic to buy blue fuel at the market price and agreed to give a 25% discount, but on the condition that Moldova will pay off the accumulated debt. Deputy Prime Ministers of the country Vladislav Kulminsky and Andrey Spynu asked to cut the cost of gas by half – Moldova has no money to buy energy resources at market prices.

According to the official representative of “Gazprom” Sergei KupriyanovChisinau owes Moscow $ 709 million. He noted that “the representatives of Moldova for some reason do not want to recognize the accumulated amount of debt.” In addition, “I do not like the price of gas, although the pricing here is clear and transparent.”

Rewrote the contract, now there is no money

Now the cost of one thousand cubic meters of gas for Moldova is $ 790. A year ago, Chisinau paid $ 149 per thousand cubic meters for blue fuel. Why is that? The fact is that Moldovagaz changed the terms of the contract with Gazprom, refusing to link the cost of gas to the cost of oil in favor of market pricing. From now on, prices for Russian gas for Moldova depend on spot prices in Europe – at the German hub NCG. In recent months, gas prices in Europe have been renewing highs day by day.

Now a state of emergency has been declared in Moldova due to a shortage of gas.

The reluctance of the Moldovan authorities to sign a contract with Gazprom at the proposed price could have far-reaching negative consequences, says independent industrial expert, Ph.D. Leonid Khazanov.

“These consequences, it seems, are underestimated in Chisinau: the suspension of the supply of“ blue fuel ”can lead not only to the cessation of the activities of Moldovan enterprises and freezing of residential buildings and social facilities, but to a real economic collapse, from which it will be extremely difficult for poor Moldova to get out,” the expert warns.

According to him, in fact, Moldova is on the verge of bankruptcy: its external debt exceeds $ 8.5 billion, while the country’s revenues in 2020 amounted to slightly more than $ 2.2 billion and is unlikely to grow much by the end of this year.

“The economy of Moldova depends on its neighboring Romania and Ukraine and, of course, on Russia, where many of its citizens work. According to various estimates, there are from 170 to 350 thousand Moldovans in Russia. In fact, Chisinau is on the needle of money transfers – in 2020, Moldovans working abroad sent $ 205.5 million to their homeland.

After Gazprom cuts off the supply of natural gas, the Moldovan government will have several options for solving the problem. It can conclude a new contract with Gazprom on its terms, but for this it will urgently need to pay off the debt. Only now she has nowhere to take 709 million dollars, and most likely no one will give her a loan, ”says Khazanov.

Where can Moldova get gas?

For gas, the Moldovan authorities turned to … Ukraine, which itself is experiencing a fuel crisis. According to the head of the Verkhovna Rada Committee on Energy, Housing and Utilities Andrey Gerus, Chisinau is asking Kiev for 15 million cubic meters of gas.

“Now Moldova is in difficult negotiations with Gazprom on the extension of the contract. There is a physical shortage of gas in the country, in particular for critical infrastructure facilities, ”Gerus wrote on Facebook.

Chisinau can receive gas from Ukraine, but it will cost much more than under a direct contract with Gazprom. “Kiev will not supply gas to Chisinau for free, secretly pumping out its transit volumes. In the context of the unfolding energy crisis in Ukraine, it would be strategic stupidity to aggravate the already tense relations with Russia, ”Khazanov said.

Alternatively, Moldova could import gas from Romania. But in this case, it will be more expensive. “Romania receives blue fuel from Russia through the Turkish Stream. Consequently, she can only resell it to Moldova. Chisinau will not be able to secretly take gas from Romania: the Trans-Balkan gas pipeline, through which reverse deliveries to Moldova can be carried out, is inactive for a considerable length (it only supplies natural gas to Romania: from the Turkish Stream through the Balkan Stream) “, – says the economist.

He sees another scenario for solving the gas crisis: the transfer of its own enterprises to Russia at the expense of the debt for natural gas.

“Although I doubt it has worthwhile assets, its agriculture-based economy is underdeveloped. The government of Moldova will definitely not succeed in securing the extension of supplies by force – its voice in Europe does not mean anything. Russia can easily block remittances of its citizens and stop issuing visas and work permits to them.

For Gazprom, the termination of business cooperation with Moldova is clearly not fatal, it consumes only 3 billion cubic meters of blue fuel a year. He can direct the freed up volumes to more solvent states. Moldova, on the other hand, has every right to freeze in winter if its authorities want it, ”sums up Khazanov.

Sources of information:

https://ria.ru/20211023/moldaviya-1755957123.html

https://deschide.md/ro/stiri/politic/94068/Criza-energetic%C4%83–Parlamentul-a-votat-introducerea-st%C4%83rii-de-urgen%C8%9B%C4%83 -% C3% AEn-RMoldova.htm

https://www.reuters.com/world/europe/moldovan-government-ask-par Parliament-back-emergency-energy-measures-2021-10-22 /

https://www.facebook.com/andriy.gerus

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