PM Dorin Recean says Moldova won’t pay Gazprom's $709mn demand

"We are not going to pay," Moldova’s Prime Minister Dorin Recean stated in a video post on Facebook, referring to Gazprom’s $700mn claims against Moldovagaz.

In principle, this should result in Gazprom terminating gas exports to Moldova — but the gas sent to Moldova at this moment is entirely distributed to the pro-Russian separatist Transnistria region and such a gesture would shut down the region’s entire economy (or what is left of it), besides creating problems for the electricity system in the regions controlled by Chisinau. 

Moldova's authorities announced last week the results of the international audit on the historic debts owed by the national incumbent gas transport/distribution company Moldovagaz to Russian gas company Gazprom. Only $8.6mn of the claims are justified, out of a total of $709mn requested by Gazprom, the authorities claimed, citing the audit report that was immediately rejected by Gazprom.

The debt under discussion ($8.6mn or $709mn depending on which party to believe) is a debt between two companies (furthermore, Moldovagaz is controlled by Gazprom which makes the debt an intra-group debt) and in principle shouldn’t involve the government of Moldova.

At stake there is more, though, namely the assets Moldovagaz owns in Moldova and possibly the financial deviations Moldovagaz might request from the market regulator ANRE based on the alleged debt owed to Gazprom. Gazprom has already warned against in international arbitration courts, but Moldova is probably not impressed, given the situation.

The firm statements made by Moldova’s prime minister about the claims made by Gazprom pinpoint a broader strategy Moldova adopted in order to make the Russian group irrelevant to the country’s energy system. The strategy was costly — Moldova still has in its reserves abroad gas purchased last winter at a high price of $1,000 per 1,000 cubic metres — but successful in terms of alleviating Russia’s influence.

As part of the same strategy, the Moldovan authorities decided this month to strip Gazprom-controlled Moldovagaz of its natural gas transport system (at least the rights to use it), which was transferred to Romania’s Transgaz.

Moldovagaz has already distributed non-Gazprom gas to its customers since last winter while the gas received from Russia is only for Transnistria.

The game is not over though and Moldova needs Bulgaria’s support in boosting the gas transfer capacity along the Trans-Balkan pipeline.

Moldova said it is ready to support the cost of increasing the pressure at the Grebenyky compression station but Bulgaria has not responded to the request yet, according to ICIS quoted by Mold-Street.com. At this moment, the pipeline is used (for the current pressure) at less than half of its capacity.