In an interview with the PolskieRadio24.pl portal, Dr. Aura Sabadus (Independent Commodity Intelligence Services) notes that the involvement of the Polish company PGNiG in gas supplies to Moldova was a surprise for the expert circle and that this is a very strong signal of support, an indication that Chisinau is not a hostage of the Kremlin, and at the same time a very beneficial marketing move. As she notes, the situation of Moldova is very difficult, but it is much better than a few years ago, Moldova can start to obtain gas from Ukraine, Romania, also through Polish companies.
At the same time, it is difficult to predict the development of the situation when it comes to the current gas crisis, Moldova is in a very difficult situation, our interlocutor emphasizes.
Risk of gas blackmail
Aura Sabadus emphasizes that the EU policy makers should draw conclusions from the current crises, in Europe and Moldova, an investigation should be carried out, indicating those responsible for this situation.
She adds that Europe should not succumb to Russia's gas blackmail, especially as another potential gas crisis is on the horizon.
Dr. Aura Sabadus points out that in connection with Nord Stream 2, Russia will want to limit or close transit through Ukraine, which may lead to gas shortages in the entire region of Central and Eastern Europe, and this in turn may lead to an increase in energy prices and, as a consequence, further prices increases, and to a deepening of differences between the east and west of Europe.
More about the causes of the crisis in Moldova and Russian gas policy, as well as the risks associated with it - in the interview.
PolskieRadio24.pl: How do you perceive the current gas crisis in Moldova? Russia is putting pressure on Moldova, again using gas as an instrument of political blackmail. Moldova is running out of gas and the situation is very difficult. Poland, Ukraine and the United States are reaching out to Chisinau, sending Moldova 1 million cubic meters of gas. This is the first time in history that non-Russian gas will flow to Moldova.
Dr. Aura Sabadus (ICIS): Moldova was almost 100 percent dependent on Russian gas. Until recently, it only imported gas from there – until this month, until Russia began to reduce gas supplies to Moldova.
Before this happened, Moldova tried to negotiate with Gazprom and extend its one-year contract. She hoped to receive a similar pricing formula as in the previous contract, which expired on September 30.
Gazprom decided not to extend the contract for a year, only for a month, until the end of October. At the same time, it transferred only 67 percent of the amount of gas that Moldova needs. This month, its demand would be about 90 million cubic meters.
Moldovan politicians are trying to continue negotiations with Russia, they have traveled to Moscow for this purpose. However, they did not achieve anything, they did not agree on the price.
Many people ask what is really going on. Daily demand at the level of 2-3 million cubic meters it is absolutely nothing for Russia, a mere trifle. And for Moldova, that's quite a lot.
This is an important question of why Kremlin does not want to supply these amounts of gas.
Of course, many analysts note that this is because Moldova currently has a very pro-European president, Maia Sandu, as well as a pro-EU government. This, in turn, does not please Russia.
However, Moldova is also a member of the European Energy Community. It is an EU institution that cooperates with countries outside Europe, helping them to implement reforms in the energy sector, as has been the case with Ukraine over the past few years.
It is about separating the gas transmission system, separating a gas transmission operator, ensuring transparency of the gas sector and competition as far as possible, adapting the infrastructure at the borders with Ukraine and Romania.
Gazprom has probably announced that it will allow Moldova to do this so-called unbundling, i.e. separating the transmission/distribution of energy from its production and delivery to customers – but on condition that Moldova pays off its debt to Gazprom.
Debt, however, is nothing new, it has been accumulating for many years. In addition, there is interest, which gives a total of about 700 million euros.
The reason why the debt issue has now attracted attention is that Gazprom has most likely conditioned its acceptance of Moldovan reforms, the so-called unbundling of Moldovan gas transmission operation, by repaying this debt. It should be reminded there that the operator Moldovagaz is partly owned by Gazprom. That is why Gazprom has a say in this matter.
Of course, Moldova has a problem with paying off this debt. It's a poor country, but it's doing its best to consolidate its economy. However, EUR 700 million for a country with a GDP of around EUR 12 billion, it is quite a lot.
Gazprom is currently probably putting pressure on Moldova, stating that if it does not pay off the debt by December 1, it will completely cut off the gas supply. Therefore, on October 22, the Moldovan government declared a 30-day state of emergency.
The Moldovan government has also commissioned Energocom to purchase gas. The reason why Energocom was advised to buy this gas was that Moldovagaz JSC is partially owned by Gazprom. It was a kind of compromise, because it would be ironic if Gazprom bought gas on the stock exchange. Thus, Moldova allowed Energocom to enter the market and launch a tender.
So, paying off the debt is not possible.
What is happening is very interesting. The current crisis may turn out to be blessing on diguise, as it forced the authorities and Energocom to enter the market and look for gas in other markets.
Romania is also accelerating the completion of the infrastructure connecting the Moldovan and Romanian systems, interconnectors. The connection with Chisinau has existed for some time, but gas does not flow through it, only now Moldovan government has published tariffs on gas imports through this connector. However, Moldova is not buying gas from Romania for the time being, also because currently it has much higher prices than Ukraine.
That is why, for the first time, it was PGNiG, Polish gas company together with the Ukrainian-American company ERU, that joined forces to sell gas to Moldova, most likely from Ukraine's storage resources or from the Ukrainian market.
This is the first time in history that gas from market purchases and gas not purchased directly from Russia has been sold to Moldova.
We expected that either Ukrainian or Romanian companies would sell gas to Moldova. It is unexpected and interesting that Poland has also become involved in this process. The message that Warsaw sends this way is very strong.
This is a very wise tactic on the part of PGNiG and ERU, also a smart move in the marketing dimension. At the same time, they got involved and at the same time sent a clear signal that Moldova is not alone, it can obtain gas through other routes.
Of course, this is a small amount, about a million cubic meters. However, from a symbolic point of view, it is a powerful gesture. It shows that Moldova has different possibiilities and is still not a hostage of Gazprom, it is not entirely dependent on Russian gas.
As you said, all this can turn out to be blessing in disguise. However, can Moldova solve its current gas problems in the short term? And there is a problem with maintaining pressure in the transmission lines...
This is a matter of low gas supply. That is why Energocom has announced a tender for 5 million cubic meters until the end of October. This may help Moldova cope with the issue of falling pressure in the transmission system.
Of course, we do not know what awaits us in November, in December, later on. Moldova will probably remain in need for Russian gas, especially in winter. However, Moldova has now sent a signal that it has different options. During the negotiations with Russia, it will be able to show that Gazprom is not a monopolist, it has the opportunity to buy gas from Ukraine, Romania, Polish, because PGNiG has entered the scene.
Moldova is in a difficult situation, no one doubts it, but it is much better than a few years ago. These are my main conclusions from the current situation.
Another question arises as well, what our conclusions should be with regard to Russian gas policy in the region.
The gas crisis in Moldova, as well as this year's gas crisis in Europe, should raise many questions among the policy makers of European countries.
Of course, it would be very good if there was an investigation that would identify those responsible, those who created the current situation, who led to the crisis.
If we think about the future, it is worth considering the statements of Russian officials, including Vladimir Putin, who said that with the launch of Nord Stream 2, Gazprom will send more gas to Europe. This should alarm the creators of European policies. They should consider whether they want to fully depend on a country that uses energy as a tool to gain geopolitical benefits.
The creators of European policy should be very careful and not succumb to pressure from Russia. They should make sure that Russia behaves as a trading entity and not as a political actor in the gas market, and that it does not use energy as a political tool.
If Russia continues to do what it has done to Europe and Moldova this year, what next?
That is an important question.
And what can we expect when NS2 is launched? This is a question about the long-term perspective that those shaping the policy of European countries should ask themselves.
Russia's behaviour worries Ukraine as well.
Ukraine has not currently received any gas from Russia since 2015. The problem of Ukraine is more complicated, Ukraine is currently transiting gas.
If this transit is fully redirected from Ukraine to Nord Stream 2, two questions arise. The first is whether Russia will send enough gas to all Central European countries. My theory is that not necessarily, and Ukraine is at the end of the supply line when it comes to redirecting gas from the west to the east. Ukraine would suffer the most.
Secondly, there are restrictions on the capacity of gas systems in Central Europe. It is about the capacities of interconnectors between countries, they may not be enough to allow the flow of large amounts of gas and the necessary flexibility.
The countries of Central and Eastern Europe, including Ukraine, may therefore find themselves in a very difficult situation. It is not only about limited access to gas, because there will not be enough of this raw material, but also higher prices.
Thus, after the launch of NS2 and as a result of the reduction of gas supplies to Central and Eastern Europe, the prices of energy and other products in this region will increase.
Probably, many do not realize this. And such problems may arise with the launch of NS2. Then, in the region of Central and Eastern Europe, there may be problems with the supply of sufficient amounts of gas.
This is a serious and real risk. It is therefore in everyone's interest that Europe retains gas transit every 2024 and beyond. During this time, the network of interconnectors between countries, including Ukraine with Hungary, Slovakia and Poland, should be expanded. The idea is to increase greater certainty and flexibility of supply. Otherwise, the situation of many countries in the region may deteriorate.
Energy prices will rise, the prices of other goods will also rise, the economies of these countries will be in a worse situation than Western Europe. This is the last thing the EU wants to do – deepening the differences between the east and the west. Already, the east and the center of Europe must do a lot to catch up with Western Europe.
Little is being said about this risk, but it seems that NS2 de facto may potentially hit every central European country.
What can be done to stop Russia as far as it gas blackmailing is concerned?
It is necessary to ensure that Ukraine maintains its transit. Without it, Europe will significantly increase its dependence on Russian gas and on gas transmission routes controlled by Russia.
Russia will probably continue to be an important gas supplier to Europe, but the EU should enforce that Gazprom behaves as a trading entity, adheres to European rules, and does not use gas for political purposes.
Allowing Russia to circumvent European regulations, it is an action against Europe.
I think it is also very important that the EU and the EC do not change the structure of the markets. Markets are working, as the case of Moldova has shown. There are many instruments to protect vulnerable consumers. In the long term, the markets should be left in their current form and not succumb to Russian pressure to change the rules of European markets.
Ed. Agnieszka Marcela Kamińska, PolskieRadio24.pl