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Natural gas supply for the Republic of Moldova is, nowadays, obtained almost 100% from imports. Mainly, it is provided by the Russian Federation through the gas transmission infrastructure of Ukraine. For many years, the supply of natural gas at a ‘preferential’ price has been the control lever of the Moscow government.

When the dissensions between Russia and Ukraine became a real threat to Moldova, the entire country risking to face an energy crisis in case an agreement of gas transit through Ukraine wouldn’t be reached, it became clear that Moldova really needs a long-term alternative solution.

See also: Where will the Republic of Moldova take its necessary supply of natural gas from?

For the moment, the contract of “Moldovagaz” (the main company in the Moldovan energy sector) with “Gazprom” (the Russian natural gas supplier) was extended until the end of the year. Then, a new agreement for 3 years will be negotiated.

According to the main technical-economic indicators of “Moldovagaz” for 2019, the total volume of purchased natural gas was 1.057 billion cubic meters, with an average yearly price of $233.67 per 1000 cubic meters (final delivery price).

When comparing the selling price of the Russian natural gas, it can be observed that the resource is sold at a lower price (-24%) in the European countries as compared to the CIS countries, including Moldova. It is true that the average price the Republic of Moldova will pay in 2020 could be about $30 lower than forecasted (from $133.56 for 1000 cubic meters in the 3rd quarter to $100 in the 4th quarter). The estimates show that, generally, the price could continue to fall. However, that wouldn’t mean a reduction in the final price for consumers of more than 10%, as the director of “Moldovagaz”, Vadim Ceban, announced.

Therefore, there is a plausible reason to speed up the process of supplying from alternative sources, so that the competition can do its job and cancel the monopoly prices on the Moldovan energy market. Still, the director of “Moldovagaz” claimed that, today, it is more convenient to buy from “Gazprom”, even though requests for cooperation are already being received from Romanian natural gas suppliers. “Requests for cooperation are already received from some Romanian suppliers. We will operate according to European rules. First, we will have to see what the economic aspect, the costs and the routes are,” Ceban said.

The Iasi-Ungheni-Chisinau pipeline potential

In August 2020, the Ministry of Economy and Infrastructure of the Republic of Moldova announced that the Ungheni-Chisinau segment of the gas transmission pipeline has been finished.

The pipeline has a length of 120 km and aims to increase the country’s energy security by diversifying the sources of natural gas supply of the Republic of Moldova.

According to the ministry’s information, it can ensure the transmission of natural gas in a volume of 1.5 billion cubic meters per year. After the completion of the additional Romanian segment Onesti-Gheraesti-Letcani in 2021, along with 2 compression stations, the transmission capacity could increase to 2.2 billion cubic meters per year.

The pipeline will be able to provide about 75% of the average consumption of the Republic of Moldova (including the Transnistrian region) or about 60% of the average consumption of the country during the cold period of the year.

The construction works of the Ungheni-Chisinau pipeline segment started on February 18, 2019, having an estimated value of about 80 million euro. The whole project (Iasi-Ungheni-Chisinau pipeline) was built by the Romanian company Transgaz and co-financed by the European Regional Development Fund (ERDF), having a total cost of 150 million euro. “The Ungheni-Chișinău gas pipeline will supply Moldova with gas from the Caspian Sea, the North Sea, Northern Greece, and Norway,” is mentioned in a note of the European Commission.

Recently, the European Bank for Reconstruction and Development (EBRD) communicated its intention of acquiring a 25% stake in Vestmoldtransgaz – the Moldovan gas transmission company that is operating the newly built Ungheni-Chisinau gas pipeline. The EBRD announced its investment of €20 million as part of a capital increase in Vestmoldtransgaz.

At the same time, the pipeline segment from Iasi (Romania) to Ungheni (the Republic of Moldova) was put into operation in August 2014 already. The first gas deliveries were made in March 2015, according to a report of the National Institute for Economic Research. However, the segment between Iasi and Ungheni transported natural gas for only 16 days back in 2015. In total, only 669 000 cubic meters were delivered. Transgaz representatives claimed that there was no further demand from the Moldovan authorities.

Currently, the full use of pipeline is limited by several factors: the lack of an agreement between Moldovan and Romanian authorities, non-competitive prices of the Romanian natural gas and the difference of pressure in the gas transmission system – this is why the additional Onesti-Gheraesti-Letcani pipeline segment, with the corresponding compression stations, is needed.

At the regional level, the alternative supply of natural gas could be provided by such countries as Norway, the Netherlands, Great Britain, Ukraine, Romania, Poland, Germany, etc. At the global level, the main competitors of Russia when it comes to natural gas reserves are Iran and Turkmenistan. Given the fact that the natural gas transmission system in Turkey is interconnected with Iran, Europe could also benefit from natural gas supply from Iran and Turkmenistan.

Moldova surely obtains a bigger choice of natural gas supply with the Iasi-Ungheni-Chisinau pipeline. It seems that the main problem here is related to the political will in Chisinau, which still remains unchangeable.

Photo: Vlad Gira| Facebook