Why Moldova cannot pay for Russian gas

The Moldovan government has again asked Gazprom to postpone the advance payment for January gas supplies, Deputy Prime Minister and Minister of Infrastructure and Regional Development Andrei Spinu told a news conference on January 11.

“Yesterday I had a conversation with [председателем правления «Газпрома» Алексеем] “Miller, during which we tried to agree on the possibility of postponing the payment of this advance for 10-20 days, so that” Moldovagaz “was able to save money,” he said (quoted by TASS). Meanwhile, discussions with the Russian company on this issue, according to Spin, continue.

Moldovagaz also had problems with payment for current supplies in late 2021. In November, Gazprom notified Chisinau of gas cut-offs in the event of non-payment for supplies in October-November for $ 74 million. missing funds from the budget.

Stops clarified that Moldovagaz intends to pay for December 2020 deliveries by the end of this week. “There are no problems with the payment for gas imported in December,” he said. But in order to pay off Gazprom in full for the gas it receives in January 2022, according to the Deputy Prime Minister, Moldova lacks about 25 million euros, and he has already discussed with Miller the possibility of canceling the advance payment. for January.

Otherwise, according to him, the republic may face an energy crisis again, as in December the purchase price for gas was $ 450 per 1,000 cubic meters. m, and in January rose to $ 646. On October 22, 2021, the Moldovan parliament was forced to impose a 30-day state of emergency in the country due to a possible gas shortage, which provides for a rational consumption of gas and other energy resources, as well as budget allocations for accelerated gas purchases at market prices.

The Deputy Prime Minister explained that the price increased in January due to rising spot prices in Europe and the cost of the oil basket, as they are tied to pricing under a contract with Gazprom.

Former head of the Moldovan government Ion Kiku accused the team of the current Prime Minister Natalia Gavrilitsa of rising prices. He stressed that “Moldovan officials themselves offered Gazprom a pricing formula”, according to which the increase in value was so significant. But Spinu stressed that Moldova managed to save about $ 330 million (compared to gas purchases on the spot market) thanks to a new contract with Gazprom.

Under this agreement, signed by the parties in late October 2021, Moldova must pay in full by January 20 for the entire volume of gas supplied this month. That is, part of the volume is thus advanced by the Moldovan side. “Next week, the supervisory board of Moldovagaz is to convene, at which representatives of Gazprom and the Moldovan government will once again discuss this issue,” Spinu said. 50% of Moldovagaz’s shares belong to Gazprom, another 35.3% to the Moldovan government, and 13.44% to the unrecognized Transnistrian Moldovan Republic, which it transferred to Gazprom.

Moldova annually consumes about 3 billion cubic meters. m of gas, 1.8 billion of which is in Transnistria (there is the largest consumer in the region – the Moldovan GRES). Earlier, a source in the industry told “Vedomosti” that the country can receive from alternative suppliers of about 1.3-1.5 billion cubic meters. m of gas per year. But the cost of such supplies, given the current spot quotes for gas in Europe, will still be much higher than the prices offered by Gazprom under a long-term contract. According to the ICE exchange, on January 11 at the Dutch hub TTF the price of February gas futures was about $ 981 per 1,000 cubic meters. m. In December, against the background of gas shortages in the EU futures in January reached an all-time high – over $ 2,200 per 1,000 cubic meters. m.

Moldovagaz’s previous long-term contract with Gazprom, signed in 2006 and tied to oil prices, expired in September 2021. According to it, the Moldovan side paid the Russian supplier about $ 148 per 1,000 cubic meters. m. Chisinau is the most problematic consumer of Russian gas in Europe. Moldovagaz’s total debt to Gazprom was estimated at $ 709 million, taking into account the delay.

In October, after intense negotiations, the parties signed a new five-year contract, which took effect on November 1. His most important point was the full payment of current supplies. The price is formed at the end of the month for the next, the formula of the party is not disclosed. The new contract is 70% tied to the oil basket and 30% to spot gas prices in Europe, Kommersant reported in October, citing sources.

“Such a scheme makes gas very expensive for Moldova, but it is much cheaper than for most European consumers,” said Ronald Smith, a senior analyst at BCS.

“Gazprom”, according to the head of the director of the rating service of the NRA Sergei Grishunin is unlikely to again make concessions and price revisions. He agrees with Smith that even with the significant rise in prices, Moldova buys gas much cheaper than current spot quotes. The expert added that the winter is quite warm this year, so there are no critical problems with heating in Moldova yet. However, adds Grishunin, at the end of 2021 the Moldovan GRES has already been forced to increase coal purchases.

Steady decline in spot gas prices in Europe below $ 1,000 per 1,000 cubic meters. m will begin no earlier than the second quarter of 2022, predicts consultant Vygon Consulting Ivan Timanin. According to the expert, this will happen after the launch and entry into full capacity of two major US LNG projects – Calcasieu Pass for 10 million tons and the sixth phase of Sabine Pass for 5.2 million tons -2 “. In this case, spot gas prices could drop to $ 600-800 per 1,000 cubic meters. m “, – added the analyst.

A Gazprom spokesman did not respond to Vedomosti’s request at the time of publication.

Leave a Reply

Your email address will not be published.