Moldova seeks to fast-track gas reforms

Moldova has revealed plans to accelerate reform of its natural gas industry to bring it in line with EU standards, the country’s energy minister said last week. The announcement comes after Russia’s Gazprom earlier this month rejected a proposal by Chisinau for the restructuring of its debt for gas supplies, estimated at $6.5 billion. According to local media, Moldovan Energy Minister Octavian Kalmik said the government planned to unbundle Moldova’s national gas company, Moldovagaz, in either 2017 or 2018.
Gazprom, which is the former Soviet republic’s only gas supplier, owns a stake of over 50 per cent in the utility, while the Moldovan government controls a 35.13 per cent share. The remaining equity is held by authorities in Transnistria, a breakaway region in eastern Moldova that is propped up economically by Moscow. Under the planned reforms, Moldovagaz would need to spin off its transmission and distribution activities into a separate entity that Gazprom would not be allowed to control. This is a key requirement under the EU’s Third Energy Package. Although Moldova is not a member of the economic bloc, it is obliged to implement EU energy regulations as a participant in Brussels’ Energy Community.
Chisinau attempted to unbundle the gas company once before, in 2010, but then said it would postpone the plan until 2020.
Earlier this month, Gazprom spurned a debt restructuring plan offered by Moldova that would have included the transfer of some Moldovagaz assets to the Russian producer as payment.
The proposal had also called for the debt to be divided between the arrears of Transnistria, estimated at $6 billion, and Moldova proper, estimated at $500 million.
The self-proclaimed republic accounted for two-thirds of the 3 bcm of Russian gas that was delivered to Moldova last year.
Gazprom has been unwilling to distinguish between the debts of Moldova and Transnistria, as the latter would be unable to meet payments for gas supplies on its own.
Moldova has sought to break Gazprom’s monopoly over its gas supplies, having launched a 1.5 bcm gas interconnector with Romania in August 2014.
The Lasi-Ungheni link was built at a cost of 26.5 million euros ($28 million), with the EU and Romania covering 80 per cent of this sum.
However, the pipeline still sees limited use, as it is not commercially feasible unless extended to Chisinau, which accounts for 50-60 per cent of gas demand in Moldova (excluding Transnistria).
There are also calls for Moldova to link its gas grid with that of Ukraine, offering the former another import option as well as access to gas storage, which it currently lacks.
Complicating matters, Moldova secures 80 per cent of its electricity needs from a Russian-owned thermal power plant (TPP) in Transnistria, which in turn receives gas from Gazprom.
Russia could, in theory, threaten to halt both gas and electricity supplies to Moldova if Chisinau took steps to diversify its imports.
As such, Moldova is also pursuing plans to expand its cross-border power capacity with Romania. [NewsBase]