A price for the Russian natural gas supplies to Moldova under a new contract with Russia’s energy giant Gazprom is likely to hike to $500-600 per 1,000 cubic meters, a source close to the situation told TASS.
Gazprom announced late on Friday night that a contract on Russia’s natural gas supplies to Moldova was renewed for a five-year term starting on November 1, TASS reports.
"Starting in 2021, the cost of the natural gas supplies during a frost-free season of the year is calculated based on a market price, when the demand for the natural gas decreases simultaneously with its price and is then attributed to a situation on the market of diesel fuel oil and heating oil helping the country to save money," the source said.
"But while benefits were earlier in force to all volumes of the supplied gas, a new contract states that the country will be purchasing in the opening and closing quarters of the year 70% of the volume pegged to oil prices, while the rest of the volume would be supplied based on the market price," the source continued. "The second and third quarters of the year will see purchases of the 30% of the total volume of gas pegged to oil prices, and the rest [of the volume] - based on market prices."
He also said that "considering the current situation on the market, new changes might lead to a double increase in the price in comparison with the previous formula, and may amount to $500-600 per 1,000 cubic meters."
The source stated that under a new five-year contract with Gazprom, Moldova also plans to repay its "historical debt" on the Russian natural gas supplies, accumulated in the recent years.
"Moldova pledges to repay its historical debt for recent years’ supplies of the Russian natural gas under a new contract with Gazprom, which was inked for a five-year period," he said.
"The debt currently stands at about $700 million, including overdue interest, and Moldova was previously insisting on the audit of the debt," the source added.
Situation with gas supplies to Moldova
In 2020, Gazprom delivered 3.05 bln cubic meters of gas to Moldova, which is 5.5% more than in 2019 (2.89 bln cubic meters). Currently, Moldova is experiencing a gas shortage, as the contract with Gazprom expired at the end of September. The republic's negotiations on a long-term contract with Gazprom are continuing.
The Russian gas giant is asking Moldova to pay off its $709-mln debt, and Chisinau was offered an option to defer debt payments. Gazprom is also ready to provide a 25% discount on gas, but Moldova is not yet ready to take advantage of this.
During the negotiations, the parties extended the current gas supply agreement until the end of October. This month, Moldova is importing gas at a market price of about $790 per 1,000 cubic meters. Chisinau is seeking to lower the cost of gas to an average of $200-300 per 1,000 cubic meters.
Last year, the country paid an average of $148 for the same volume. Gazprom is ready to prolong the contract for November if Moldova pays in full for the September and October supplies. At present, some of Moldova’s enterprises have switched to fuel oil, and a state of emergency has been introduced in the country. The former Soviet state has begun to look for an alternative gas supplier.
Moldova’s annual demand for natural gas is estimated at about 1.3 bln cubic meters, and together with the requirements from Transnistria amount to roughly 2.9 bln cubic meters. The republic buys fuel from Gazprom and transports it through the territory of Ukraine. At present, some of Moldova’s enterprises have switched to fuel oil, and a state of emergency has been introduced in the country. The former Soviet state has begun to look for alternative gas suppliers.