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Oct 26, 2021
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Poland rubs its hands: Moldova has found a replacement for Gazprom

Poland rubs its hands: Moldova has found a replacement for Gazprom

Photo: Alexander Ryumin / TASS

Moldova began purchasing gas from Poland after the failure of negotiations with Gazprom to conclude a new gas contract. On Monday, October 25, the Moldovan company Energocom and the Polish concern PGNiG signed an agreement on the supply of a trial batch in the amount of 1 million cubic meters of “blue fuel”. This was the first in the history of Moldova to purchase gas from alternative sources, and not from Russia. At the same time, Chisinau plans to continue negotiations with Gazprom on obtaining energy resources at a “fair price”.

Let us remind you that the long-term contract between Moldova and Gazprom expired on September 30th. Since then, the parties have been negotiating its extension, which so far have not yielded results. Moscow insists that Chisinau pay off the debt in the amount of $ 709 million (including the delay), and is also ready to provide the country with a 25% discount to current market prices. The Moldovan authorities have stated that they recognize the debt only after an independent audit, and also demand a 50% discount under the contract. The problem of the debt for gas supplies to Transnistria remains outside the brackets, since this debt has already reached $ 8 billion, but Chisinau does not believe that it should pay for gas supplies to the unrecognized republic.

Now Chisinau has to buy gas from Gazprom at $ 790 per thousand cubic meters, and he hopes to reduce this price to $ 200-300. Last year, when energy prices were at historically low levels, Moldova paid only $ 148 per thousand cubic meters. But since then, the market value of oil and gas has risen to record highs.

Due to the conflict with Gazprom and the gas shortage in the country, a state of emergency had to be declared. Therefore, the Moldovan authorities have intensified their search for alternative sources of “blue fuel” and opted for Poland. At the same time, the price of such a supply may amount to about $ 1.1 thousand per thousand cubic meters. taking into account quotes on the stock exchange. Gazprom offered to supply up to 5 million cubic meters per day at the price of the current contract, $ 790. That is, Polish supplies will be much more expensive anyway.

According to experts, for the current heating season, Moldova needs about 700 million cubic meters. gas, and at such prices it will cost almost a billion dollars, taking into account all costs. The annual demand of Moldova for natural gas is estimated at about 1.3 billion cubic meters. m (with Transnistria – about 2.9 billion cubic meters), which the republic buys from Gazprom and transports through the territory of Ukraine.

It is clear that one million cubic meters of Polish gas will not solve the problem of Moldova, but, as the authorities of the country say, they, first of all, wanted to test the possibility of alternative supplies, as well as maintain the necessary level of pressure in the gas transportation system, and did so.

However, according to Deputy General Director of the Institute of National Energy Alexander FrolovPoland will not be able to satisfy Moldova’s gas demand. But it will be able to resell the same Russian gas to Chisinau, but with a large overpayment. This is approximately how Ukraine satisfies its energy needs today, which has to buy Russian gas from European companies with a large margin.

– You know, there used to be unfair and offensive stereotypes about the people of Moldova, and now the country’s leadership, including Harvard-graduated President Maia Sandu, is doing everything to comply with them. It is difficult to refrain from irony, because the purchase of a million cubic meters of gas from Poland is pure clownery. I think Gazprom also perceives this with humor, because this is not a negotiating position, but nonsense for several reasons.

First, Poland itself is an energy-deficient country. It does not fully provide itself with the necessary energy resources, including gas. Yes, a dozen years ago, some “wise” experts said that Poland would start producing shale gas with the help of the Americans and would become a major supplier. But very soon it became clear that this was unrealistic, and only the most exalted representatives of the expert community adhere to such views. The fact is that Poland is forced to buy gas abroad.

From here comes the second point – if you buy gas from Poland, you overpay for it. This understanding may not be available to Harvard alumni, but if you buy an item from a reseller, you will almost certainly pay more for it than if you buy directly from a supplier. It’s hard to take this seriously because in this news one side tries to present itself as cunning and skillful in terms of negotiation, but it gives the impression of a three-year-old trying to tie his own shoelaces for the first time.

By the way, the third important point is that Gazprom is ready to sell gas to Moldova at a 25% discount, and official statements have been made about this. There is only one condition – to recognize the existing debt in the amount of $ 433 million plus interest, and begin to pay it off within three years. But in Chisinau they pretend that this debt does not exist, that these are “Kremlin narratives” or that these are Transnistrian supplies. Although Gazprom emphasizes that this is a debt formed without taking into account the supplies of Transnistria, which remain outside the brackets.

SP: – If the alternative to Gazprom in the form of Poland is so unprofitable, why is Chisinau showing such persistence in negotiations?

– We need to go to the deep background of what is happening. For many years Moldova has formatted its legislation on the European model, including gas legislation. Since Europe has been abandoning oil pegging in long-term contracts for 12 years and switching to spot pegging when forming prices, Moldova also demanded that its agreement be revised taking into account spot indexation. It is clear that she did not demand this in the middle of 2021, when “suddenly” it was discovered that the market was working not only towards lower prices, but also towards higher prices.

The bottom line is that Moldova, at its own request, switched to spot indexing, and then said: “Oh, something is expensive, we thought it would be cheaper, let’s pay less.” And refuses to pay bills. Today Moldova owes more than $ 700 million, excluding supplies to Transnistria.

You can make big eyes and say that they have nothing to pay with, but in any contract there is a clause on the procedure for resolving disputes, which, as a rule, involves the involvement of a third party. And if the agreement says that Moldova must pay this amount, it will eventually pay this amount. Let me remind you that even the Stockholm Arbitration Court in the proceedings between Russia and Ukraine, which in the end turned out to be extremely scandalous, ruled in favor of Gazprom.

Therefore, the situation looks absurd from all sides. The chances of Moldova to dodge and pay nothing are negligible. There is only a chance for Sandu personally to drag out the proceedings and leave them to his successor. I suppose that some part of the debt, for example, penalties and fines, Gazprom can forgive, taking into account the difficult economic situation.

But for this, the debt must first be recognized, and not negotiated from the position: “We will now go to the Ukrainians or Poles and we will negotiate with them on gas supplies.” By the way, how is Romania doing there, from which they even built a gas pipeline to receive gas? Obviously something went wrong. In fact, Romania, Poland and Ukraine have their own production, but it is not enough to support their consumption, let alone export. These three countries are similar in something else – the main source of gas, due to which they meet this deficit. And this source is the Russian Federation and Gazprom.

Ukraine today does not receive gas directly, but through intermediaries, and it could well tell Moldova how much it has to overpay for this. But, most likely, Ukrainian managers prefer not to advertise this sacred knowledge. Therefore, even in the case of purchases from Poland or Ukraine, the same Russian gas will go to Moldova, only with a large overpayment. Moreover, it will most likely have to pay in the end for Gazprom’s debt as well. Therefore, the costs under this option will be much higher than if Chisinau immediately recognized the debt, paid off and bought gas at a discount from Gazprom.

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