This country’s complex struggle to shake off its dependence on Russian gas [reportage]

For decades, the former Soviet Republic remained 100% dependent on Gazprom for its gas and electricity. Shortly before the Russian invasion of neighboring Ukraine in 2022, Moldova began diversifying its supplies, in order to break the monopoly. A political enterprise far from easy for this landlocked state with modest incomes.

In a tower with tinted windows in the heart of Chisinau, the Moldovan capital, Vadim Ceban, overwhelmed with phone calls, is worried. This September day, the director of Moldovagaz, the main gas supplier to the country of 2.6 million inhabitants, does not know how Moldova will be supplied with energy from January. We are looking for gas at a good price on the European futures markets, but the prices remain too high for us, he explains. Gazprom’s prices remain unbeatable. The price of a megawatt hour for them is 32 euros compared to 39-40 euros on the markets (TTF price, the Rotterdam index), to which must be added the transport or storage costs.. For Vadim Ceban: “We cannot act as if Russia does not exist, we must also act with Gazprom”. Here, gas is more of a political affair. Before turning to the markets in 2022, the former Soviet Republic was dependent on 5.7 million cubic meters of gas daily in summer and 8 million cubic meters daily in winter, all delivered by Russia’s Gazprom.

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In Moldova, not everyone shares Vadim Ceban’s opinion. Some politicians, fervently pro-European, are advocating a total break with the Russian gas giant. The invasion of Ukraine in February 2022 has in fact accelerated its desire to overhaul the energy system. Ranked behind kyiv, the pro-European government is diversifying its supplies.

It thus follows the policy of the EU, which says it wants to get rid of Russian natural gas by 2027 to punish Moscow. For Brussels, this implies a total overhaul of the European energy axis, which before the war in Ukraine depended 45% on Russian natural gas. In 2023, Moscow only exported 18% to the continent, but deliveries nevertheless increased again in 2024. The EU intends to further favor American liquefied natural gas – the extraction of which is nevertheless prohibited in several European countries due to of its polluting nature – or even Norwegian gas.

An energy mix very dependent on fossil fuels

“Political” will clashes with economic reality. “The price of Russian gas is still cheaper today. Russia is one of the countries with the most gas reserves in the world. The economy was built on this gas. The gas pipelines date from Soviet times and Moscow has no new structures to build”specifies Phuc-Vinh, researcher on energy policies at the Jacques Delors Institute.

Also, for Moldova, a country with precarious incomes, the task of breaking up the Gazprom monopoly is more complex. A look at the maps allows us to understand the geographical vulnerability of the country with regard to the transport of energy. With an area similar to that of the Burgundy region, located between Romania to the east and bordered by Ukraine to the north, west and south, Moldova has no access to the sea . It imports the majority of its energies. Oil is the country’s primary resource (around 35%), followed by gas (nearly 30%), biomass (23%) then electricity (13%), according to the government.

The inhabitants, for their part, mainly heat themselves with wood, especially those in the village houses which dot this country with vineyards. In cities, where gas and electricity supply more homes, collective homes are energy sieves that are expensive to heat. At the entrance to Chisinau, two tall, staggered residential buildings in the brutalist style, nicknamed the “City Gates”, embody the Soviet architecture that permeates the capital.

Gas routes: a complex Soviet legacy

For decades, the main Moldovan gas supply route was a land corridor that splits Ukraine, built under the USSR. Moldova’s electricity was produced from this Russian gas in a power plant in what is now Transnistria, a region in the west of the country, located behind the Dniester. This delivery system has withstood modern borders and political tensions after 1991, when Moldova gained independence. Chisinau continued to import Russian gas after the breakup of the USSR, despite several tensions with Gazprom. Pro-European Moldovan governments have repeatedly accused Gazprom of “blackmail” in recent decades, accusing it of fluctuating prices during diplomatic tensions.

Transnistria, nicknamed today the “left bank”, has seceded and does not pay gas to Gazprom, which has not claimed its debt for years. If Moscow does not recognize de jure it recognizes this isolated territory of some 250,000 inhabitants de facto by subsidizing it. Its self-proclaimed “capital”, Tiraspol, still supplies the “right bank” – the rest of Moldova – with electricity today, basing its economy on this income. For thirty years, Gazprom and Moldovagaz – a company 50% owned by Gazprom – signed five-year contracts, on a very stable price formula, generally adjusted once a year with the Moldovan gas distribution company. Each part, Transnistria and the rest of Moldova, received and paid for their energy separately.

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The war in Ukraine, a turning point

But the war in neighboring Ukraine has undermined this fragile system. Victor Binzari, CEO of Energocom, remembers October 2022 as a “turning point”. His small public company responsible for finding energy at the best price on the markets had to multiply its working capacity overnight. “Gazprom announced a 30% reduction in deliveries to Moldova, to 5.7 million cubic meters per day – the minimum required according to the contract – compared to the 8 million needed at this time of year”he recalls, in his office located on a vast boulevard in Chisinau. Gazprom pointed to the “refusal” of Ukraine at war to accept the transit of Russian gas on its soil. An argument contested by kyiv and Chisinau.

“We found ourselves plunged into a state of energy emergency, we had to chart new energy routes and diversify our supplies. This encouraged us to go and buy on the futures markets”continues Mr. Binzari. The authorities therefore reversed the flow of a gas pipeline in the south of the country which initially carried Russian gas to the Balkans. Thanks to this opening of a second gas corridor for Moldova, “the right bank no longer imports Gazprom gas”welcomes Mr. Binzari. In April, Moldova purchased American LNG, regasified in a Greek port. But Chisinau mainly imported gas produced in Romania, a border country that has become a key player in its energy transformation. For this policy, the poorest state in Europe benefits from aid from the American Agency for International Development of 70.52 million euros in two years and 1.6 billion euros from the EU , since 2021, as well as loans from the European Investment Bank.

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Depoliticization of energies?

On the electricity side, the business is more complex and Gazprom is still there. Although the country is now synchronized with the European ENTSO-E network, whereas it previously depended on the electrified network of the former USSR, it lacks connections with Europe. Three high-voltage lines are planned to connect it to Romania by 2026, 2027 and 2031. The pro-European government also hopes to develop renewable energy to 30% by 2030. In the meantime, Transnistria manufactures around 80% of Moldovan electricity – from the 5.7 million m3 of gas that Gazprom continues to deliver.

For its defenders, this market logic aims to “depoliticize” energies. In this liberal system, buyers are in fact unaware of the origin of the gas before the transaction: the flows circulating in the system of interconnected gas pipelines in Europe can also come from numerous suppliers such as the United States, Qatar or even… from Russia for liquefied natural gas (LNG), which is more difficult to trace. Some transit states are also accused of not providing gas certificates of origin. For the pro-Russian Moldovan opposition, this opacity shows that it is difficult to completely break in practice with Moscow’s energy.

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Francesco Sassi, energy expert and author of studies on European energy dependence, however: “The crisis we are still experiencing and Russia’s clever use of all types of energy as a political instrument have shown us all that international politics and energy are closely linked. There is not a single country in the world that does not link its political objectives to its energy strategies and vice versa. Europe must carefully choose its next political interdependencies based on its values. The politicization of energy markets and exchanges will not stop with the current phase we are going through with Russia.”

A crisis in Transnistria?

Soon, another event could weaken the Russian European delivery system. Neighboring Ukraine has in fact announced the end of the transit of Russian natural gas by the end of December, thus stopping flows to Europe and Moldova. Deprived of free gas, pro-Russian Transnistria could no longer supply electricity to the right bank. In a report published in September, the International Energy Agency warned of “Moldova’s vulnerability”. Some experts put forward an unofficial alternative: an Azerbaijani company could be the intermediary in shipping the gas.

But who will pay for Transnistria? “We could buy gas for Transnistria ourselves (and bring it via the southern gas pipeline – editor’s note) but it would be very difficult and costly for everyone”worries Mr. Binzari, from Energocom.

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Met in Chisinau, Moldovan Energy Minister Victor Parlicov questions “Gazprom’s actions”. “The company would be able to send its gas to Transnistria via another southern gas pipeline, via Turkey, but this would involve transport costs for it, since Tiraspol does not pay for its gas. Is Gazprom ready to pay for Transnistria? “.

For the secessionist territory, a total gas cut – a scenario in which Mr. Parlicov does not believe – would cause a “humanitarian crisis”, he says: an exile of refugees, from this territory, seeking to warm themselves during a winter where temperatures are close to -4 degrees, but also a serious economic crisis, Transnistria living on electricity income. Some see this possibility as the moment to finally reintegrate the pro-Russian region of Transnistria into Moldova. “No one has an interest in destabilization in Transnistria,” insists Energy Minister Mr. Parlicov. There are around 1,400 Russian soldiers still there, the army has never left since 1991. This is not the time to create tension, especially in times of war in Ukraine.