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    Moldova declares state of emergency over gas shortage


Moldova relies on Gazprom for all its gas supplies.

by: Joseph Murphy

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Moldova declares state of emergency over gas shortage

Moldova's government has declared a state of emergency over natural gas shortages, after Gazprom cut supplies by a third at the start of month after the two sides agreed a short-term supply contract.

Moldova relies on Gazprom for all its gas supplies. But its contract for supplies ended on September 30. A new one-month agreement was reached only a few hours before the old one's expiry, and according to gas transmission system operator Moldovagaz, this meant Gazprom had no means of reserving the necessary transit capacity via Ukraine.

"All the steps we are taking now are necessary to ensure the country's energy security, to be able to allocate financial resources for the purchase of gas from alternative sources, and to ensure that we bring the pressure back in the natural gas system to an appropriate level," prime minister Natalia Gavrilita said.

Moldova is also paying a higher price for gas right now, as the short-term contract with Gazprom sets a price that is hub-based rather than indexed to oil-based fuels. This means the country is paying $790/'000 m3 for gas this month – almost five times more than it paid last year.

Moldova had been pushing for more hub-based pricing when prices were lower.

The government has been in talks on obtaining gas supplies from Poland via Ukraine, and a new pipeline to bring Romanian gas to the capital Chisinau is understood to be almost ready to operate. But Romania is likewise dealing with a gas supply crunch.

In its statement on October 22, the government said it had approved the emergency purchase of gas and was allocating funds to pay for these supplies. It may also take steps to "rationalise consumption" of gas, and has ordered the release of emergency reserves of fuel oil to ease energy shortages.

The breakaway region of Transnistria has given assurances that the gas-fired Kuchurgan power plant will continue regular electricity supplies to Moldova proper.

European Commission president Ursula von der Leyen on October 21 described the events in Moldova as a case study in how Russia uses gas as a geopolitical tool. There is speculation that Russia is exerting pressure on Chisinau in response to its election of a pro-West president, Maia Sandu, last year.

"Nothing commercial, just brutal geopolitics," Stanislav Secrieru, analyst at the EU Institute for Security Studies, commented.

"[The] crisis in Moldova is occasion for the EU to demonstrate again its stabilising force in eastern neighbourhood," he said. "Now stability in country's energy sector is a prerequisite for continuation of ambitious reforms launched this summer and backed by the EU."

However, other experts have questioned the narrative that Russia is to blame for the crisis.

"Moldova's gas crisis is largely of Moldova's own making, as it had refused to extend its contract with Gazprom despite having no certainty gas would be coming from anywhere else, rejecting the Russian president envoy, Kozak, attempts to find a compromise solution," Katja Yafimava, senior research fellow at the Oxford Institute for Energy Studies, said.

Moldova has until the end of October to negotiate a longer-term and more favourable contract with Gazprom. The Russian company notably has not booked any capacity via Ukraine beyond the contractual minimum in November.