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Russia's Gazprom threatens to reduce gas transit via Ukraine from Nov 28


Points to transit imbalance for supplies to Moldova

Transit to be reduced by amount of daily 'under-delivery'

Implies gas meant for Moldova is being kept in Ukraine

  • Author
  • Stuart Elliott
  • Editor
  • Alisdair Bowles
  • Commodity
  • Natural Gas Oil
  • Topic
  • Europe Energy Price Crisis War in Ukraine

Russia's Gazprom said Nov. 22 it would reduce gas supply entering Ukraine at the Sudzha entry point from Nov. 28 if an imbalance in volumes delivered via Ukraine to Moldova persists.

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Russian gas flows via Ukraine to customers in Europe and Moldova are currently only supplied via Sudzha at a rate of some 43 million cu m/d.

However, Gazprom said in a statement that the volume of gas supplied for transit to Moldova exceeds the physical volumes actually arriving in Moldova.

That implies that some gas meant for Moldova is being kept in Ukraine.

If the transit imbalance is maintained, Gazprom said it would begin reducing gas supply to the Sudzha entry point for transit through Ukraine from Nov. 28 "in the amount of the daily underdelivery."

Gazprom said Moldovagaz paid on Nov. 21 for part of its November supplies, and that the payment was for the supply of 25 million cu m of gas.

Gas shortfalls

Moldova has struggled to pay for Russian gas imports in 2022 due to much higher prices, and Gazprom already reduced supplies to the country from October citing issues with Ukrainian transit at Sokhranivka.

Gazprom has also repeatedly threatened to halt gas exports to Moldova if importer Moldovagaz missed payment deadlines.

Gazprom said it also reserved the right to terminate the supply contract given that Moldovagaz had still not settled its historical debt to Gazprom.

Since October, Gazprom has only been supplying 5.7 million cu m/d of gas to Moldovagaz, well below the 8.1 million cu m/d that should be delivered according to the terms of their contract.

To make up the shortfall, Moldova has held daily supply auctions, and Chisinau is also considering legal action against Gazprom for the undersupply.

Gazprom has said it had reduced the volume due to the force majeure on Russian gas deliveries via the Sokhranivka entry point on the border with Ukraine.

Moldovan demand

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

The country's 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).

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

In December 2021, it was just $450/1,000 cu m, but rose significantly over the summer to more than $1,500/1,000 cu m.

The price for Russian gas supplies in November is $821.58/1,000 cu m after spot European gas prices fell sharply since September.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price Nov. 21 at Eur114.23/MWh, down from the record Eur319.98/MWh in late August.

In October 2021, Gazprom and Moldovagaz extended their long-term gas supply agreement for a further five years until September 2026.