Moldova agrees Russian gas deal, delays TSO unbundling by another year

LONDON (ICIS)–Moldova has clinched a five-year supply deal with Gazprom but expects to delay the unbundling of its transmission operations by another year, Andrei Spinu, the country’s deputy prime minister said on 1 November.

EU rules require transmission operations to be separated from Moldovagaz, majority owned by Gazprom and the Moldovan ministry of economy.

Under contractual terms, the country will import 3 billion cubic metres (bcm) annually at a price calculated based on a formula linked to hub and oil values.

A market source close to negotiations confirmed the country was now receiving 11.13 million cubic metres (mcm) a day for November and said volumes would be imported via Ukraine for the upcoming year.

The price paid for gas this month would be $450.00/kscm (€36.95/MWh), €30.00/MWh lower than current European hub values for November.

The price is expected to drop below $400.00/kscm in December, according to Spinu.

Following negotiations with the Russian producer Gazprom, Moldova is now expected to sign two agreements in 2022.

The first relates to the restructuring of debt held by Moldovagaz, which together with penalties amounts to $725m. Spinu said the government will launch a tender for an independent audit. The debt settlement will have to be agreed by 1 May 2022.

DEBT

The debt restructuring is critical to Moldova because Gazprom has made clearing the debt a condition for the unbundling of transmission operations from Moldovagaz.

Sergiu Tofilat, a senior Moldovan energy security analyst told ICIS the country had been expecting to unbundle transmission operations and apply EU regulations since 2011 but Gazprom had asked it to postpone these measures until 2020.

As the deadline expired last year, Moldova made a fresh attempt to unbundle the transmission operations but Gazprom made the debt repayment a condition of the divestment.

Following negotiations, Moldova is expected to postpone the unbundling by another year until the debt is restructured and the parties reach an agreement.

POLITICAL SENSITIVITIES

The second deal which Moldova is now expected to sign with Russia relates to an intergovernmental agreement which would have to be concluded by the end of 2022.

Tofilat said stakeholders would have to meet before the end of 2021 to discuss the issues that would be addressed in the intergovernmental agreement. The discussions will be public.

He said one of the main issues would relate to the granting of transport and supply licence to Tiraspoltransgaz, a transmission arm of Moldovagaz overseeing the shipment of gas to Transnistria.

The issue is politically charged because if the Moldovan regulator ANRE grants the licence to the Transnistrian company it would mean an official recognition of an independent company in the unrecognised breakaway state of Transnistria. The region is wedged between the River Dniester and the Moldovan-Ukrainian border and has been embroiled in a frozen conflict with Russia since the 1990s.

Moldova clinched the supply deal following reduced gas supplies in October.

Its contract had expired in September and the country sought to renew it from 1 October.

However, Gazprom agreed to sell on a spot basis linked to the German THE hub.

As Gazprom was supplying only 67% of its monthly demand estimated at 90mcm, it turned to spot markets for the first time ever, buying additional volumes at TTF indexed prices.