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    Moldovagaz to miss Russian gas bill


Debt predicament continues to escalate, despite new regulated tariff.

by: Callum Cyrus

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Natural Gas & LNG News, Europe, Liquefied Natural Gas (LNG), LNG Condensed, News By Country, Moldova

Moldovagaz to miss Russian gas bill

Moldovagaz is seeking 75.5mn lei ($15.8mn) in unpaid charges from non-residential customers for July, limiting its ability to fulfil wholesale payments to its sole gas supplier Gazprom.

State-backed Moldovagaz said August 17 it had suspended gas deliveries to more than 2,000 gas users, under a 2019 law that permits action where debts get out of hand. Moldovagaz had cut off gas supplies to 708 domestic consumers on August 10.

Moldovagaz previously confirmed settling debt for Russian gas supplies on April 20, paying up its obligations for deliveries made in March. The bill came to $69.5mn and was paid with state funding, rather than customer revenues.

The historic debt load for Moldovagaz was in October 2021 calculated at $709mn, Gazprom claims, though Moldovagaz disputes the figure. The two sides were supposed to have completed an audit of Moldovagaz's outstanding debt on May 1. Moldovagaz has since requested an extension to the deadline.

Gazprom holds a 50% equity stake in the Moldovan utility, with 35% owned by the national economy ministry. The remaining 13.5% share is held by the unrecognised breakaway region of Transnistria. Moldova currently gets all of its gas from Russia, under a contract that runs until 2026.

Moldovan politicians often talk of reducing Russia's gas market share. On June 23, the European Bank for Reconstruction and Development awarded a €300mn ($318mn) loan to Moldova to pay for gas purchased from European trading hubs. Yet a new interconnector to Romania, launched in 2021, remains barely used as Russian gas remains cheaper than spot volumes.

Given Moldovagaz's inability to collect the bills, debts to Gazprom continue to snowball. Matters came to a head again earlier this month, when the utility was forced to seek a deferral of Gazprom's August charge. In a Telegram post August 17, Moldovagaz CEO Vadim Ceban said he hopes to put it off until December .

Ceban claimed "deviations" from the tariff would amount to 954mn lei in January-July, 409mn lei in August and 623mn lei in September. The upshot is a 2bn lei deficit that will need to be factored into end user gas tariffs, Ceban added.

Officials say a new regulated tariff introduced recently has failed to improve the situation, falling substantially below the $1,458/'000 m3 wholesale price stipulated in Gazprom's contract. The national regulator ANRE's new tariff is based on a price of just $899/'000 m3, according to SeeNews.

Even this price seems too high for Moldovan businesses, however. The gas charge rose by 47% in August, prompting Moldovan opposition leader Igor Dodon, who has pro-Kremlin ties, to push for a snap presidential and parliamentary election. Dodon looks to Hungary as evidence of how Moldova should leverage talks to grab a better gas deal. Hungary's prime minister Viktor Orban, who also has closer Kremlin ties than most EU member states, has said a new deal with Gazprom could supply almost 1bn m3 into his country in coming months.

 Dodon said: "[Our] president Maia Sandu and prime minister Natalia Gavrilita should set aside their pride and urgently head to Moscow to agree a lower price for gas like the leadership of Hungary... which pays a much better price than Moldova."