Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 29 October 2021
Moldova Says Gas Crisis Over After Deal With Russia
The Moldovan government and Russia’s state-controlled Gazprom said on October 29 they have agreed to extend a contract for Russian natural gas supplies for a period of five years. It is said off-the-record that the price formula suits more the Moldovan side. It is little surprising that Moscow eventually reduced its expectations as Gazprom cannot afford to halt supplies to Moldova as Russian-sourced gas powers some utility plants in the Moscow-loyal breakaway region of Transnistria.
The agreement was reached after talks in Saint Petersburg, putting an end to the Russia-Moldova energy dispute that broke out last month. Moldova’s contract with Gazprom expired at the end of September. Gazprom drastically raised the prices for gas deliveries to Moldova to $790 per 1,000 cubic meters from $550, while slashing its gas supply by about one-third after their contract expired. The Russian gas giant added it would halt gas flows to Moldova if the country failed to pay its debt. As the country faced an energy crisis, Moldova declared a state of emergency and had to look for gas supplies elsewhere, buying commodities from Poland, Ukraine, and the Netherlands. On October 25, Moldova bought a million cubic meters of natural gas from Poland in its first purchase from elsewhere than Russia. The European Union offered €60 million in aid to Moldova while the bloc’s chief diplomat Josep Borrell said Moldova was a victim of Russia’s efforts to use natural gas to bully the country while the price increases were politically motivated. The agreement was eventually reached between Moldova’s Deputy Prime Minister Andrei Spinu and the Russian state-controlled firm’s CEO Alexei Miller. Neither Gazprom nor the Moldovan side revealed further details. Gazprom said in a short statement that talks with the sides reaching an agreement to extend the expired contract on “mutually beneficial terms” while Moldova’s diplomats called it an “agreement using the formula proposed by the Moldovan side.” The price will be between $500–$600 per 1,000 cubic meters, according to unofficial reports. In the summer (Q2–Q3), gas prices will be correlated with market prices. In the winter, or between Q4 and Q1, gas prices for Moldova will be tied to the prices on the diesel and mazut markets. Moldova is also obliged to repay its old gas debts estimated at $700 million. Gas deliveries under the new contract are expected to start from November 1.
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