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Moldova slams Russia's Gazprom over gas supply reduction threat

Highlights

All gas for delivery to Moldova ends up in Moldova: Spinu

Gazprom threatened to reduce transit via Ukraine from Nov. 28

Spinu says Moldova has 200 million cu m of gas in storage

  • Author
  • Stuart Elliott
  • Editor
  • Alisdair Bowles
  • Commodity
  • Natural Gas Oil

Moldova's Deputy Prime Minister Andrei Spinu Nov. 23 slammed Russia's Gazprom for threatening to reduce supply to Moldova via Ukraine, saying all gas for delivery to Moldova is ultimately consumed in Moldova.

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On Nov. 22, Gazprom said it would reduce supply entering Ukraine at the Sudzha entry point from Nov. 28 if a perceived "imbalance" in volumes delivered via Ukraine to Moldova persisted.

Gazprom said volumes of gas meant for Moldova were being retained in Ukraine and that it would reduce supply at Sudzha "in the amount of the daily under-delivery" if the situation continued.

On his official Telegram channel, Spinu rejected the Gazprom claims. "Gazprom, in a style we are already used to, threatens us with further reduction of gas supplies," Spinu said.

"To be clear -- all the gas delivered to Moldova ends up in our country. All gas delivered to the right bank is and will be paid for by us," he said.

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).

Spinu said the gas volumes referred to by Gazprom as remaining in Ukraine in November were volumes held in storage for future supply to Moldova.

"Let it be also clear here -- these volumes were and will be fully paid for by our country," Spinu said.

Moldova has no gas storage facilities of its own but can store gas in neighboring Ukraine and Romania. Spinu said Moldova already had over 200 million cu m of gas in storage.

Nominated volumes

In a separate statement Nov. 23, importer Moldovagaz -- which holds the supply contract with Gazprom -- said the volume of gas delivery was determined by daily nominations by Moldovagaz to the Russian company.

Those nominations are confirmed by Gazprom and the operators of the gas transmission networks in Ukraine and Moldova, it said.

"The operators of the transport networks of Ukraine and Moldova have always ensured the delivery to Moldovagaz of the volumes of gas indicated in the confirmed nominations," it said.

"This fact is confirmed by the monthly commercial documents signed both between Moldovagaz and Gazprom, as well as between the operators of the transport networks in Ukraine and Moldova."

Moldovagaz added that the interconnection agreements between Ukraine and Moldova provided for procedures for regulating all cross-border physical flow, including reverse flow.

They also provide for the maintenance of an operational balancing account, which records the difference between system user nominations and measured gas quantities.

Moldovagaz said that in the first half of November, the difference between the nominated and measured gas volumes was significant as the average outside temperature recorded was above the seasonal normal.

"This led to the later start of heating season than usual," the company said.

Gas shortfalls

Since October, Gazprom has only been supplying 5.7 million cu m/d of gas to Moldovagaz, 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 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.

Moldova has also struggled to pay for Russian gas imports in 2022 due to much higher prices, while Gazprom has also repeatedly threatened to halt gas exports to Moldova if importer Moldovagaz missed payment deadlines.

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 $450/1,000 cu m, but rose 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. 22 at Eur121.70/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.

However, Gazprom has said it reserves the right to terminate the supply contract given Moldovagaz had still not settled its historical debt to Gazprom.