Publication: Eurasia Daily Monitor Volume: 3 Issue: 2

On January 1, Russia’s Gazprom imposed a total halt on gas deliveries to Moldova. The management in Moscow issued an internal order to its dispatchers on Ukraine’s territory to reduce the supplies to Moldova to “zero level” (Moldpres, January 2). Gazprom has not officially announced the move, nor has it denied it.

Moldova (like Georgia) is a very small market for Gazprom; the company’s profits from price hikes in this case are perforce also very small. The price hikes in this case reflect mainly political and geopolitical motivations. Moldova was paying $80 per 1,000 cubic meters of gas. This price remained unchanged from 1996 to 2005; it was the highest price paid by any Commonwealth of Independent States country during most of this period. In 2005, Moldova (without Transnistria) imported only 1.1 billion cubic meters of gas from Russia. Moldova’s “historic” debts to Gazprom were small and routinely being rescheduled. Moldova was paying its gas bill each year on schedule and 100% in cash.

Moreover, Gazprom owns a controlling stake of 50% plus one share in the MoldovaGaz company, with the Moldovan government holding 34% and Transnistria’s authorities 13%.

Concurrently, Moldova charged a transit rate of $2.5 per 1,000 cubic meters of Russian gas per 100 kilometers of pipelines on Moldovan territory en route to third countries. The transit capacity of up to 25 billion cubic meters annually was being used to the tune of about 70% until 2005. The main traditional end users being affected are Bulgaria, Greece, and Turkey.

In November 2005 Gazprom announced that it would double the price in 2006 to $160 per 1,000 cubic meters — the same price it was demanding of Ukraine at that stage. In the ensuing negotiations, Moldova asked Gazprom to accept a 30% increase in two stages during 2006. Gazprom refused to negotiate on that basis, however. In late December, Moldova’s First Deputy Prime Minister Zinaida Greceanai spent several days in Moscow seeking appointments with several ministers in the Russian government, but they all refused to receive her.

Transnistria owes more than $1 billion to Gazprom; the Kremlin has allowed Transnistria to consume Russian gas almost gratis for a decade.

(Moldpres, January 1, 2, 3)