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Moldovan request for more Russian gas 'not satisfied' as state of alert issued

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Moldovan request for more Russian gas 'not satisfied' as state of alert issued

Highlights

Consumers urged to use gas sparingly on Russian shortage

Priority given to households, key services, power plants

Talks continue with Gazprom on new long-term arrangements

Moldova has urged consumers to use gas sparingly during the current period of crisis after Russia's Gazprom failed to meet a request for additional supply in October.

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Moldovagaz -- itself 50% owned by Gazprom -- said late Oct. 14 it continued talks with the Russian company on new contractual arrangements for the supply of gas after Moldova's state Commission for Exceptional Situations declared a "state of alert" in the gas sector.

"We call on consumers to rationalize their gas consumption during the crisis," Moldovagaz said in a statement.

It said the alert level provided for the implementation of a series of actions "that allow the management of the gas crisis without the need to resort to emergency measures, such as stopping the supply of gas to non-household consumers".

Priority users during the crisis, it said, would be households, key service providers such as power stations, hospitals and schools.

Moldovagaz said that at the beginning of October, in parallel with talks with Gazprom on a renewal of its long-term supply contract, it requested an increase in supply for the month.

That, it said, "has so far not been satisfied".

Russian President Vladimir Putin said Oct. 13 that Gazprom was prepared to increase gas supplies to Europe if it received requests for additional volumes.

Gazprom could not be reached for comment Oct. 15.

Transit miss

The shortage arose after Moldovagaz's supply contract with Gazprom was extended in a last-minute deal on Sept. 30 for just a month, which meant the Russian company did not book additional capacity to supply Moldova via Ukraine for October in an auction held Sept. 20.

Moldova is, therefore, contracted to receive just 54 million cu m of gas in October from Gazprom for supply to consumers on the right bank of the Dniester -- where the capital Chisinau is located.

That is well short of the 90 million cu m Moldova needs to cover all demand in October, Moldovagaz said.

Moldova's demand is divided between the Moldovan territory on the right bank of the Dniester (around 1.2 Bcm/year), and the Russian-supported, breakaway region of Trans-Dniester on the left bank (1.8 Bcm).

Moldovagaz said the volume of contracted gas for supply to the right bank of the Dniester for October of 53.8 million cu m corresponded to the annual capacity reserved by Gazprom for supply via Ukraine.

"It covers the needs of protected consumers in the country -- 48.5 million cu m -- in the period," it said.

"The reservation of the additional capacity in the Ukrainian transport system, which would fully cover the necessary 90 million cu m for October, was to be made through the auction on Sept. 20."

"As the negotiations on the extension of the long-term contractual basis for gas supply were not completed by Sept. 20, it was decided to extend the validity of the existing contract on Sept. 30 in limited volumes -- corresponding to the capacity already reserved by Gazprom -- in order not to stop the supply of gas."

Moldova, which has no gas storage, has moved to cover some of the lack of imports using gas held in the country's pipelines, which led to a decrease in pressure in the transmission system operated by Moldovatransgaz.

Deputy Prime Minister Andrei Spinu said Oct. 11 the government wanted to sign a new long-term contract with Gazprom, but it would have to be at a "favorable" price.

Cited in Moldovan media, Spinu also said the government was in talks with EU countries on securing alternative supply, including Romania.

Romania pipeline

Moldova is fully connected to Romania via the Ungheni-Chisinau pipeline, which was completed late in 2020 and which enables Moldova to import some 0.5 Bcm/year from Romania.

However, the pipeline has so far only delivered negligible volumes, mostly during April and which were said to be test supplies.

That new supply source could give Moldova more leverage in its talks for contract renewal with Gazprom.

In 2021, the price Moldovagaz paid for Russian gas imports into Moldova in the second and third quarters was indexed to the German NCG hub for the first time.

The price in Q1 and Q4 remained indexed to oil products, as has historically been the case.

Moldovagaz had been hoping to switch away from pure oil indexation and to reach a new deal with Gazprom having elements of spot market indexation.

Moldova is not an insignificant gas market -- Gazprom sold a total of 3.05 Bcm of gas to the country in 2020, putting it on a par with the likes of Belgium and Greece as a sizeable market for Russian gas supplies.