The gas supply contract of the Russian ‘Gazprom’ company with Moldova was extended for 5 more years from November 1, 2021. The protocol on settlement of current issues in the gas sphere was signed on Friday, October 29. According to Moldova’s ministry of infrastructure, the parties also agreed upon the price formula and the audit of the debt accumulated by Moldovagaz.
Russian natural gas price for Moldova may reach $500-600 per 1,000 cubic metres, according to the source of TASS. It is stated that under a new five-year contract with Gazprom, Moldova plans to repay its “historical debt” on the Russian natural gas supplies accumulated in recent years. Currently, it stands at about $700 million, including overdue interest, and Moldova pledges to repay it under the new contract.
“Starting in 2021, the cost of the natural gas supplies during a frost-free season of the year is calculated based on a market price, when the demand for the natural gas decreases simultaneously with its price and is then attributed to a situation on the market of diesel fuel oil and heating oil helping the country to save money,” the source specified.
However, it is noted that while benefits were earlier in force to all volumes of the supplied gas, a new contract states that the country will be purchasing in the opening and closing quarters of the year 70 per cent of the volume secured to oil prices, while the rest of the volume would be supplied based on the market price.
“The second and third quarters of the year will see purchases of the 30 per cent of the total volume of gas pegged to oil prices, and the rest – based on market prices,” the source said.
He also said mentioned that “considering the current situation on the market, new changes might lead to a double increase in the price in comparison with the previous formula, and may amount to $500-600 per 1,000 cubic metres.”
As stated, in 2020, Gazprom delivered 3.05 bln cubic metres of gas to Moldova, which is 5.5 per cent more than in 2019 (2.89 bln cubic metres). Currently, Moldova is experiencing a gas shortage, as the contract with Gazprom expired at the end of September. The Russian company asks Moldova to pay off its $709-mln debt, and Chisinau was offered an option to defer debt payments. Gazprom is also ready to provide a 25 per cent discount on gas, but Moldova is not yet ready to take advantage of this.
During the negotiations, the parties extended the current gas supply agreement until the end of October. This month, Moldova is importing gas at a market price of about $790 per 1,000 cubic metres. Chisinau is seeking to lower the cost of gas to an average of $200-300 per 1,000 cubic metres. Last year, the country paid an average of $148 for the same volume. Gazprom is ready to prolong the contract for November if Moldova pays in full for the September and October supplies.
Moldova’s annual demand for natural gas is estimated at about 1.3 bln cubic metres, and together with the requirements from Transnistria amount to roughly 2.9 bln cubic metres. The republic buys fuel from Gazprom and transports it through the territory of Ukraine. At present, some of Moldova’s enterprises have switched to fuel oil, and a state of emergency has been introduced in the country.