Bucharest and Brussels’ shameful self-disclosure

They want to provide Moldova with.. Russian gas within the strategy of energy security and elimination of dependence on Moscow

Bucharest and Brussels' shameful self-disclosure

There were always many comical things around the Iasi-Ungheni-Chisinau gas pipeline project. For example, on 27 August (Independence Day) 2014, at the official launch of the Iasi-Ungheni section, in the presence of Romanian Prime Minister Victor Ponta and EU Energy Commissioner Günther Oettinger, then Prime Minister Iurie Leancă made a promising statement.

He said: “We have a commitment and I am convinced that, in two years at most, we will have all the elements necessary to be able to buy gas only from Romania, in the event that at the appropriate stage we come to the conclusion that the prices will be much more favourable, and I have reason to believe that this will be the case.”

Already in 2018, as deputy prime minister for European integration, Leancă again utters the old incantation: “I am sure that from January 1, 2020, we will be able to buy gas from Romania as well.

Of course, the most absurd thing is the fact that since 2014 the gas pipeline has actually been idle. And even after its official commissioning last summer, the full Iasi-Ungheni-Chisinau line is still not being used as intended.

Many clever words were spoken then by Romanian, Moldovan and European officials about the importance of this pipeline. For example, the head of the Energy Community Secretariat Janez Kopacz pointed out that the isolation of the Moldovan gas market and its complete dependence on a single gas supplier and a single gas import route had long been a weak point in the security of natural gas supplies to the country. “The Iasi-Ungheni-Chisinau project will rectify this and give Moldova alternative routes and alternative suppliers,” Kopac stated optimistically.

Of course, the emergence of a new route in addition to the existing ones is an undeniable fact. But what about the rest? After all, Bucharest, Brussels and Washington unashamedly say that Moscow is using gas deliveries as a political tool, and the new pipeline is being built to deprive Russia of its leverage.

What do we see in practice?

The other day, the Moldovan public got to know that as an alternative to the Russian gas will be… the Russian gas itself. The General Director of the Romanian company Transgaz Ion Sterian proudly announced that from the 1st October the Iasi-Ungheni-Chisinau gas pipeline can start working at full capacity. The blue fuel from the Turkish Stream will be transited to our country. That is, the Russian fuel.

Ion Sterian recalled that, at present, only gas destined for Moldova is transported via Ukraine via the former Trans-Balkan corridor. As of 1 April 2021, Romania and other Balkan countries will import Russian gas via Turkish Stream. And once the compressor stations are commissioned, the Iasi-Ungheni-Chisinau gas pipeline can indirectly replace the Ukrainian route for transporting/transiting Russian gas to the RM by the Romanian one.

“We are in talks with Moldovagaz”, –  the Transgaz director general specified.

Thus, Romania and the European Union (one of the main investors in the Iasi-Ungheni-Chisinau gas pipeline) will ensure Moldova’s energy security with Russian gas.

At the time when Kiev is desperately fighting with Moscow to save its gas pipe, the Romanian and European friends have hustled and offered to supply Russian blue fuel via their route. Certainly, wanting to make money on transit.

And Chisinau just like buying the energy from Gazprom, and will continue to do so. And by the way, the Moldovagaz company has already announced that it would extend the contract with Gazprom for another year by the end of September.

What about the lauded Romanian gas and other “alternative suppliers”? Since Romanian Transgaz has offered us Russian blue fuel, it is clear that so far Bucharest has no alternative or its price is not competitive.

It is known that the purchase price included in the Moldovagaz contract tariff for this year is $147, not including transportation and distribution costs. News agencies have recently reported that the price of natural gas on the European spot market has approached the historic highs. This level was last seen in 2008. Experts see the blame for the current situation in the failed energy policy of the EU administration.

But in North Asia, too, spot prices are soaring: $ 460 per thousand cubic metres was paid on 30 June.

The chart below shows blue fuel prices at European hubs to the Ukrainian border.

For 1,000 cubic metres it is 14,800 hryvnia, or about $550, including VAT. Interestingly, Moldova has achieved the possibility of using the spot component in calculating the cost of gas supply. According to the Moldovagas representative, if the price on European exchanges is lower than that calculated based on the old formula pegged to oil quotations and previously always applied, Moldovagas will buy gas on the exchange, that is, the one which is cheaper.

But as you see, in practice it turned out that using exchange prices might not be profitable.

Thus the current price situation in Europe and the actions of the Romanian company Transgaz that offered Russian gas to Moldova showed that behind the talks of the West and pro-European politicians about the so-called energy security, there may hide the usual desire to make a profit or create a new dependency. As a matter of fact, we have the right to speak about the shameful self-exposure of Bucharest and Brussels that promised through the mouths of their faithful “servant” Iurie Leanca to provide Moldova with “Romanian gas in two years”.

Situation in which Moldova finds itself in the field of energy supply has a number of important features. Gas is a critically important resource for the country. It is used not only for heating of houses but also for production of electricity. The main supplier, Moldavskaya GRES generates more than 90% of electric power with gas turbines. The Moldavskaya GRES’s offer in recent years proves to be the most advantageous for us in the region.

At the same time, Transnistria has by now accumulated a huge gas debt – over USD 7.5 billion.

Gazprom is the main shareholder of Moldovagaz, which purchases, transports and distributes the blue fuel.

In order to settle the problems accumulated and likely to emerge in the future, Chisinau should conduct pragmatic negotiations with Moscow. To show initiative, to propose, to act, instead of waiting for someone to be invited to the capital and to plot a blockade of Transnistria, to provoke Russian peacekeepers.

And we have seen on the example of the pompous Iasi-Ungheni-Chisinau gas pipeline project that there are no alternative gas sources capable of competing with the Russian fuel yet.

The policy of confrontation is nonsense for Moldova. And participation in all kinds of anti-Russian geopolitical projects of the West, such as the “associated trio”, the “Crimean platform”, the explosive NATO exercises in the Black Sea, is a mistake for which Chisinau can pay a very high price. People from across the ocean can use Kiev or Chisinau against Moscow. But not vice versa.

For so many reasons, maintaining a strategic partnership with Russia remains for Moldova a guarantee of survival and existence.

It is possible, of course, to follow the path that Kiev has chosen for itself. But this is a time-extended suicide mission.

Unlike Ukraine, Moldova has less safety margin and considerably more existential threats.

Sergei Tkach

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