New energy contract with Gazprom will allow Chisinau to survive the coming cold
This winter, residents of Moldova do not have to worry about their homes – heat and light will be provided on time and in proper amounts. However, as in the next five years. It was for this period that Chisinau managed to agree with Gazprom on new conditions for the supply of “blue fuel”. The pricing formula fixed in the deal satisfies both parties: Moldova will receive gas much cheaper than European exchange quotations, and Russia, in turn, will sell energy resources at almost twice the price of tariffs reflected in long-term contracts. The only unresolved issue was the debts of Chisinau to Gazprom: the payment of $ 700 million, which the republic owes to the monopoly, has been extended indefinitely, so the chances of promptly recovering the required amount from the Russian company are zero.
The first gas to Moldova under a new contract with Gazprom began to be pumped on November 1. Almost until the last moment, the inhabitants of the republic were in a frankly alarming state. Chisinau was not able to buy raw materials on European exchanges: although quotations of “blue fuel” dropped from the record values of September-October, they still remain at the level of $ 850 per thousand cubic meters, which is almost three times higher than the values of the beginning of the year.
The pricing formula of the new contract between Russia and Moldova will be hybrid, that is, based on both the quotations of oil products and the spot price of “blue fuel” in gas hubs in Europe (the ratio will be determined in the proportion of 70% to 30% in favor of “black gold”) … In November, Moldova will receive gas under a new contract at $ 450 per thousand cubic meters. Moldovan President Maia Sandu said she was pleased with the result of the dialogue with Gazprom – on the eve of the frost, on overcoming which the future harvest and the execution of her country’s budget largely depend, Chisinau was able to convince Moscow of its financial reliability. Russia will not be at a loss either – last year Moldova paid an average of $ 148 for the same volume. According to the press secretary of the Russian president Dmitry Peskov, the Kremlin considers the deal “mutually acceptable and mutually beneficial.”
“The details of the contract have not been disclosed, but it is easy to calculate that if oil prices drop to $ 60-70 per barrel, the cost of gas for Moldova will be about $ 300, and if the quotations of“ black gold ”rise to $ 100, contract prices will soar to $ 600 per thousand cubic meters. In the period from April to October, the gas price will take into account the spot component at the German hub NCG. In other words, in the warm season the price of Russian gas for Chisinau will be minimal, and in winter the pricing will take into account the situation on the diesel fuel and fuel oil market, ”explains the head of the analytical department of AMarkets Artem Deev.
Chisinau welcomes the conclusion of a new long-term contract. “For Moldova, November 1 actually turned into a holiday – many citizens of the republic, living in private houses and directly dependent on gas supplies, stopped wearing winter clothes at home, which had to keep warm for the last two months. Their houses were not turned off from heating, but the supply of energy resources was limited to a minimum, ”says Marina Munteanu, director of one of the Moldovan regional gas distribution departments.
However, according to experts, the next formula for the cost of “blue fuel” is far from the main open question that remains after the signing of a new Russian-Moldovan agreement. “Chisinau agreed to pay off the debt accumulated by Moldova to Gazprom for deliveries in previous years, which, together with interest and penalties, exceeds $ 700 million,” said Mark Goikhman, chief analyst at TeleTrade. – For Moldovans, such an alignment only postpones the hour when they will have to dress up in sheepskin coats and wadded trousers for almost the whole year. Although Chisinau insists on an independent audit confirming the amount of debt, it may take several years to pay off debts – in 2019-2020, the country’s entire GDP did not exceed $ 12 billion. ” So far, there is an agreement between the parties that the debt will be repaid within a year during the new supply contract. The repayment terms will be determined in the short term. The possibility of repaying the debt to Gazprom using the country’s internal resources or with the help of external loans will depend on specific agreements.
“Our country is going to repay debts to Gazprom – the government has already spoken about raising the value added tax,” notes Marina Munteanu. – The average nominally accrued salary in Moldova in 2020 increased by 10% – to almost $ 470. However, more than half of the salaries of our fellow citizens will still have to pay off old and new debts to Russia – due to the increase in taxes that awaits all citizens. At the same time, alternative energy suppliers in Europe have explicitly stated that they will not provide the country with fuel without long-term contracts with Gazprom.
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