Moldova, Russia’s Gazprom Extend Gas Contract After Dispute

Russia had been threatening to cut off gas supplies to Moldova at the end of the year if the impoverished ex-Soviet republic's existing gas contract had not been extended by then. (file photo)  

The Moldovan government and Russia’s state-controlled Gazprom say they have agreed to extend a contract for Russian natural gas supplies for a period of five years, after disagreements between the sides over the price triggered severe shortages in the former Soviet republic.

Gazprom said in a short statement on October 29 that talks between a Moldovan delegation and Gazprom ended in St. Petersburg with the sides reaching an agreement to extend the expired contract on "mutually beneficial terms” while Moldova’s Infrastructure Ministry called it an "agreement in principle" under which the previous deal will be extended "using the price formula proposed by the Moldovan side."

Neither Gazprom nor the Moldovan side revealed the price agreed.

“Gas deliveries under the new contract are expected to start from November 1, 2021,” the Ministry said in a post on Facebook.

Moldova declared a state of emergency last week and started buying gas from other countries after its contract with Gazprom, the largest supplier of natural gas to Europe, expired at the end of September, and the two sides failed to agree on details and pricing of a new long-term deal.

Traditional supplier Russia had been threatening to cut off gas supplies to the impoverished country sandwiched between EU member Romania and Ukraine at the end of the year if the existing gas contract was not extended by then.

One of the key issues was Moldova’s debt for previous gas supplies that Russia estimated at more than $700 million.

Gazprom and the government in Chisinau agreed to audit the debt and to negotiate a payment schedule, according to the Moldovan side.

The two-day talks in St. Petersburg, where Gazprom has its headquarters, involved Moldova’s Deputy Prime Minister Andrei Spinu and the Russian firm’s CEO Aleksei Miller.

Gazprom drastically raised the prices for gas deliveries to Moldova to $790 per cubic meter from $550 while slashing its gas supply by about one-third after their contract expired last month, prompting criticism from the European Union, which said that Russia was "weaponizing" gas supplies.

Some observers say Moscow has boosted prices as reprisals against Moldova for electing pro-Western President Maia Sandu last year and rejecting Russia-backed incumbent Igor Dodon. Russia rejects the accusations, saying the hike is purely commercial, reflecting global markets.

Moldova has also complained of received “insufficient volumes” of gas from Gazprom based on the one-month extension of the contract.

As the country faced a growing energy crisis, Chisinau signed a contract to buy a million cubic meters of natural gas from Poland, the government said on October 25, calling it "the first purchase of gas from alternative sources” in the history of independent Moldova.

And earlier on October 29, Ukrainian state energy firm Naftogaz said it had won a tender to supply 500,000 cubic meters of gas to Moldova.

The EU offered Moldova, one of Europe’s poorest countries, 60 million euros ($70 million) in emergency aid on October 27 to help the country manage its natural gas crisis.

Russia has been criticized in the past for setting prices according to a country’s political allegiance. Belarus, a close Moscow ally, has recently negotiated a significantly lower price for next year.

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