The Kremlin is threatening to turn off Moldova’s Gas. Pro-Russia separatists are blamed for running up the energy bill

The Kremlin is threatening to turn off Moldova’s Gas. Pro-Russia separatists are blamed for running up the energy bill

Tony Wesolowsky

As winter approaches, people in Talmaza, a village in the southeast corner of Moldova, Europe’s poorest country, are scrambling to secure fuel to heat their homes.

With the country locked in a natural-gas dispute with Russia, many fear they will be literally left out in the cold.

“Wood is expensive. So is coal. Those young people that emigrated from Moldova did the right thing. We older people should do the same. It’s not worth living here,” one elderly resident in Talmaza recently told RFE/RL’s Moldovan Service.

Moldova, caught in a tussle for influence between Moscow and the West, is apparently being punished by the Kremlin after electing Maia Sandu, a pro-EU president, last year. Her party won a landslide victory in July’s parliamentary elections.

At the negotiating table, Russia holds a strong hand, including Transdniester, a Moldovan breakaway region on the eastern border with Ukraine, and hefty stakes in key Moldovan energy concerns.

Since declaring indepen-dence in 1992, Transdnies-ter has received economic, political, and military support — including hundreds of troops stationed there — from Moscow, although it does not recognize the breakaway region as an independent state.

And it is Transdniester that is not only consuming much of the natural gas shipped by Gazprom to Moldova, but refusing to pay for it, Moldovan politicians and others contend, claiming it is a further form of Kremlin backing.

“Since this separatist phenomenon has existed, Transdniester has not paid for a cubic meter of gas it has consumed. All the money collected [for gas deliveries to customers in the separatist region] goes to their budget and is used by the separatist government for social payments in order to maintain the regi-me,” explained Ion Sturza, a Moldovan politician and former prime minister, in comments to RFE/RL’s Moldovan Service.

While Transdniester benefits from the local gas revenues, it is Moldovagaz, the Moldovan gas company, that is billed for the gas and is responsible for paying for it. The gas crunch in Moldova comes as Europe wrestles with skyrocketing gas prices blamed on strong demand globally and an unwillingness by Gazprom to provide additional supplies to the European market beyond those secured through long-term contracts. Some see this as pressure by Russian President Vladimir Putin to push for final approval of the Nord Stream 2 pipeline, a controversial Baltic Sea natural-gas pipeline to Germany that critics say will tighten Russia’s energy grip on Europe. “Of course, this is a tool for convincing Europeans of the need to launch Nord Stream 2,” said Serhiy Herasymchuk of the Ukrainian Prism Foreign Policy Council in comments to RFE/RL’s Russian Service.

Who Is Responsible For the Bill?

Moldova’s contract with Russia’s state-controlled Gazprom, the largest supplier of natural gas to Europe, expired at the end of September. Gazprom has extended the contract to the end of October, while raising the price to $790 per cubic meter from $550 last month.

Gazprom threatened on October 23 to suspend gas exports to Moldova if it is not paid for previous deliveries, and no contract for December is signed. That came a day after Moldova declared a state of emergency, freeing up additional government funds to buy gas amid soaring world energy prices.

With negotiations continuing this week, a key point of contention has arisen: How much does Moldova owe Gazprom? The Russian gas giant says the amount is $709 million, although many have questioned that.

The figure could be “much less than $700 million,” said Dionis Cenusa, a political risk analyst, in an October 26 post on Twitter, adding that calls are growing for an audit of Moldovagaz.

Gazprom tampering with the numbers might not be surprising since it holds a majority 51 percent stake in Moldovagaz, the company liable for the debt. That control is effectively higher when factoring in that separatist Transdniester holds just over 13 percent of Moldovagaz. As for the Moldovan government’s stake in the country’s state gas company, that amounts to only some 35 percent. Moldovan President Sandu has made clear the gas debts are not Moldova’s but rather Moldovagaz’s and the company should settle the issue with its majority shareholder on its own. Gazprom has taken Moldovagaz to court, inside Russia, no less than 16 times, to get the company to pay up, with the latest case in the International Court of Arbitration of the Russian Chamber of Commerce and Industry coming in May. All previous cases have ended in Gazprom’s favor.

There are not only questions and doubts about the true amount Moldova owes Gazprom, but also about who is responsible for generating much of that debt. Many point to Tiraspoltr-ansgaz, the gas company of the unrecognized government in Transdniester.

Transdniester, home to much of Moldova’s obsolescent Soviet-era heavy industry, is ever in need of energy, former Moldovan Prime Minister Sturza exp-lained, noting that the Mo-ldova Steel Works in R-abnita, Transdniester, “consumes 60 percent of all the gas consumed” in Moldova. The U.S. Energy Inform-ation Administration has confirmed that Transdni-ester “contains the majority of Moldova’s power generation capacity and heavy industry.” Transdniester not only uses much of Moldova’s energy, it also generates most of the power there as well. Specifically, the Cuciurgan power plant, on the border with Ukraine on a lake of the same name, which churns out some 80 percent of Moldova’s electrical power, although it’s unclear how much of that output relies on gas. The plant is often described as gas-fired, although its Russian owner has in the past touted it as “a unique power plant using three types of fuel: gas, fuel oil, and coal.” Earlier this month, officials at Cuciurgan announced that it may reduce output due to a drop in gas shipments.

Not only is the plant in separatist-controlled territory, but it is owned by Inter RAO, the Russian state energy company whose CEO, Boris Kovalchuk, is the son of billionaire Yury Kovalchuk, a close ally of Russian President Vladimir Putin. Igor Sechin, another influential Putin ally, is chairman of Inter RAO.

‘Economic Blackmail’

“It’s clear that all the energy resources of the Russian Federation are used as an instrument of economic blackmail that turns into political blackmail,” Aleksandr Slusari, founder and deputy chairman of Moldova’s Dignity and Truth Platform Party, told Moldovan media.

Moldova relies on Russia for nearly all its natural gas. And given its geographic position, the country is a crucial link in the transit chain of that gas from Russia to countries in southeastern Europe, including Bulgaria, Greece, Turkey, and Romania.

However, Moldova’s shift to the West, accelerating under Sandu, including tighter energy integration, has spooked Moscow, writes Aura Sabadus, a senior energy journalist.

“During summer 2021, some European officials were already pointing out in private conversations that the country’s desire to integrate with neighboring Romania and Ukraine via market mechanisms was not going down well in Moscow,” Sabadus explained in an article posted by the Washington-based Atlantic Council.

Gazprom has offered to lower its price to Moldova if Chisinau alters its free trade deal with the EU and postpones energy market reforms agreed with Brussels, the U.K.-based Financial Times reported on October 27. The changes in the country’s energy sector are part of the integration in the European energy market, as Moldova is required to harmonize its energy policy and legislation with the Energy Community Treaty.

Help On The Way

To meet its immediate gas needs, Moldova, which uses 2.8 billion cubic meters of gas annually, has received some supplies from neighboring Romania and Ukraine.

On October 25, Moldova’s government announced it had bought 1 million cubic meters of natural gas from Poland, calling it “the first purchase of gas from alternative sources” in the history of independent Moldova. That may be a stopgap measure, but Chisinau is thinking long-term as well to reduce its reliance on Russian natural gas and Russian-controlled companies.

A crucial new gas pipe-line, stretching 150 kilometers from Iasi in Romania to Chisinau and linking Moldova to the European energy system, was completed earlier this month.

The pipeline is owned and managed by Vestmoldtransgaz, a subsidiary of Romania’s Transgaz. The European Bank for Reconstruction and Development (EBRD) also has a 25 percent stake in Vestmoldtransgaz.

There has been other Western help. In 2019, the EBRD, along with the EU, the European Investment Bank, and the World Bank provided a 270 million euro ($313 million) package to finance a permanent connection between the electrical networks of Moldova and Romania. Back in Talmaza, Ion Barcari voices his support for Moldova’s expanding energy cooperation with its neighbors.

“We have to face the fact that we’ve depended too long on Russia and need to abolish this dependence by developing good relations with Romania, Ukraine, and other neighboring countries,” Barcari told RFE/RL’s Moldovan Service. “Now our hope is on relations with Romania and the rest of Europe, because the Russians just want to impose their will on Moldova.”

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