Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 25 October 2021
Russian Gas Blackmail: A “Moldova Lesson” For Europe
Russian energy giant Gazprom is trying to force Moldova into signing a new contract to purchase gas at eye-watering prices. Russia is taking advantage of a gas monopoly by exerting pressure on Moldova and restricting its gas flows to the country. The government in Chisinau is hoping that the EU and Ukraine helps the country while the Moldova gas crisis shows the danger of becoming fully reliant on Russian energy commodities.
Gazprom will suspend gas exports to Moldova if it does not get payment for previous supplies and no contract for December is signed, the Russian energy giant said on October 23 in a statement. Moldova’s gas contract with Gazprom expired at the end of September, and the two have taken time to seal the deal and extended it for a month yet paid more than before. Moldova has balked at Gazprom’s price of $790 per 1,000 cubic meters of gas instead of $550 now. Moldova had asked Gazprom to halve its price offer while Gazprom had offered a cut of 25 percent. Not only does Gazprom want more money for gas, but it also cut flows to Moldova by a third in October. Moldova relies entirely on Russian commodities for its gas needs. On October 22, Moldova’s parliament has voted to approve a 30-day state of emergency in the energy sector allowing the country to buy gas under a simplified scheme with additional funds. The Moldovan government is asking for help from its European Union partners and Ukraine. Gas could possibly reach Moldova through reverse flows from neighboring Ukraine and Romania while Poland and Slovakia will also supply the commodity. Moldova consumes some 2.8 billion cubic meters of gas each year. Gas prices soared five-fold since last year, obviously due to the situation in Europe where the price of this commodity skyrocketed dramatically. Moldova’s contract with Gazprom ties the price of gas for Chisinau to its prices on the German stock exchange. However, Moldova refuses to pay the full market price, saying Gazprom has a monopoly. It is the only gas supplier to Moldova while controlling transportation, distribution, and sales. How is that possible? That is because Russia has a 50 percent controlling stake in Moldova’s state gas company Moldovagaz. Moscow-loyal insurgents from Moldova’s breakaway region of Transnistria have a 13.44 percent stake while the Moldovan government has just 35.33 percent. However, Gazprom’s latest announcement to suspend supplies from November should come as part of a war of nerves. Russia is pressing on Chisinau but it cannot halt supplies to Moldova completely because most plants and facilities in Transnistria run on Russian gas commodities, including those where Moscow is the main shareholder such as the biggest power station in Kuchurgan.
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