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Russia's Gazprom reduces gas export volumes to Moldova for October

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Russia's Gazprom reduces gas export volumes to Moldova for October

Highlights

Gazprom to supply only 5.7 million cu m/d to Moldovagaz

Blames Ukrainian block on transit via Sokhranivka

Moldova able to meet demand until start of heating season

  • Author
  • Stuart Elliott
  • Editor
  • Jonathan Fox
  • Commodity
  • Natural Gas Oil

Russia's Gazprom said Oct. 1 it would supply only 5.7 million cu m/d of gas to Moldova's Moldovagaz this month due to Ukraine's block on gas transit via the Sokhranivka entry point.

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In a statement, Gazprom also said it could terminate the current supply contract with Moldovagaz "at any time" given that an agreement to settle historical debt had yet to be reached.

Moldova had expected 8.1 million cu m/d to be delivered in October via Ukraine, according to the terms of its contract with Gazprom.

Gazprom said the reduced volume of 5.7 million cu m/d had been predetermined by the "unilateral refusal of the Ukrainian side to accept Russian gas at Sokhranivka."

Ukraine's gas grid operator GTSOU in May declared force majeure on its ability to transit Russian gas entering at Sokhranivka due to the fact it had lost control of gas infrastructure in parts of eastern Ukraine.

It reduced by some 33 million cu m/d the volume of Russian gas transiting Ukraine.

It is unclear why Gazprom decided to reduce the supply to Moldova only in October despite the force majeure being declared in May.

Gazprom also said Oct. 1 that Moldovagaz "regularly violates the terms of payment for the supplied gas."

"At the same time, due to the fault of the Moldovan side, an agreement on the settlement of the historical debt for gas supplied in previous years has not yet been concluded," it said.

"For this reason, Gazprom has the right to terminate the contract at any time."

Heating season

Moldova is a fairly significant buyer of Russian gas, with imports of more than 3 Bcm/year.

Its demand is divided between the Moldovan territory on the right bank of the Dniester of around 1.2 Bcm/year, and the separatist region of Trans-Dniester on the left bank (2.1 Bcm/year).

In a separate statement Oct. 1, Moldovagaz said it had been expecting a total of 250 million cu m of Russian gas to be delivered in October -- or an average of 8.1 million cu m/d.

Of the total, 80 million cu m (2.6 million cu m/d) was for delivery to consumers on the right bank of the Dniester and 170 million cu m (5.5 million cu m/d) for consumers on the left bank.

Moldovagaz said the actual supply of 5.7 million cu m/d would, however, be enough to provide consumers with gas until the beginning of the heating season.

"Additional capacities to cover the demand for heating installations in the amount of 2.4 million cu m/d for both banks of the Dniester can be secured through daily auctions," it said.

"On Sept. 30, Moldovagaz sent the request to additionally reserve the necessary gas capacities on the RBP platform," it said.

Higher prices

Moldovagaz has struggled through 2022 to meet its payment commitments to Gazprom after prices under its long-term contract rose sharply.

The Russian contract price is formulated according to a mixture of prices on the Dutch TTF hub and fuel oil prices.

In December last year, it was just $450/1,000 cu m, but has risen significantly through 2022 to more than $1,500/1,000 cu m.

Platts, part of S&P Global Commodity Insights, assessed the TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26. It was last assessed on Sept. 30 at Eur164.50/MWh.

Last October, Gazprom and Moldovagaz extended their long-term gas supply agreement for a further five years until September 2026.

Ahead of the new long-term deal, Moldova experienced an acute gas shortage after a last-minute, one-month extension of the agreement with Gazprom at the end of September meant Russian supply for October had been lower than hoped.

It was forced to hold a number of daily tenders for the supply of gas from European traders to meet demand, having declared a state of emergency.

Among the suppliers to Moldova at that time were Ukraine's Naftogaz Ukrayiny, Poland's PGNiG as well as traders DXT Commodities and Vitol.