Mihai Melintei, Energy Analytical Studies
The current situation in Moldova’s energy sector underlines the critical interdependence between the two banks of the Dniester – Chisinau and Tiraspol – in terms of energy supply. An additional geographically driven dispute for the energy situation in the Republic of Moldova remains the antagonism between Gazprom and Naftogaz over the transit of natural gas from 1 January 2025.
Chisinau-Tiraspol interdependence, natural gas supply and electricity generation
The Republic of Moldova has been severely affected by the war in Ukraine, which has had a significant impact on natural gas supplies. In this context, Chisinau started to look for alternative solutions to reduce its dependence on Gazprom and diversify its energy sources. As of December 2022, the Republic of Moldova stopped purchasing gas from Gazprom for consumption on the right bank of the Dniester. The gas requirements for the right bank of the Dniester were covered by imports from the European Union. Some of this gas has also been stored in underground storage in Ukraine and Romania as a safety measure.
At the same time, as of December 2022, the entire natural gas volume of 5.7 million m3/day delivered to Moldova by Gazprom has been allocated to Moldovagaz to cover the consumption of the left bank of the Dniester and for the production of electricity by the Cuciurgan Thermoelectric Power Plant (MGRES), located in the Transnistrian region and owned by the Russian company Inter RAO. Here an important variable comes into play, namely the demarcation of the energy crisis in two directions, the supply of natural gas and electricity generation.
The Republic of Moldova has endeavoured to reduce its dependence on Russia and accelerate its integration into the European energy system. Chisinau has invested in modernising the energy infrastructure and interconnecting its electricity grids with Romania, as well as in receiving natural gas in reverse flow through the Trans-Balkan pipeline. However, despite this modest progress, energy interdependence between the left and right banks of the Dniester remains a major problem and the existing gas supply system continues to highlight Moldova’s vulnerabilities in the energy sector.
The unregulated conflict in the Transnistrian region further complicates Moldova’s energy security. If gas supplies to the Transnistrian region are disrupted, Chisinau will face a major energy crisis, given that the Cuciurgan Thermoelectric Power Plant produces about 80% of the electricity needed by the entire country. Any disruption in the electricity generation process on the left bank of the Dniester will seriously affect Moldova’s economic stability and energy security.
Maintaining a steady flow of gas to the Transnistrian region is critical for Chisinau. Both the national economy and the population depend on the supply of electricity from the left bank of the Dniester at a dumped price that no regional producer can compete with. In the third quarter of 2024, Energocom purchased about 1.11bn kWh of electricity. The share of energy produced by the Cuciurgan Thermoelectric Power Plant accounted for 82%, totalling 913 million kWh, while the thermal power plants in Chisinau and Balti generated only 1% of the consumption needs – 12.15 million kWh. 11% of the electricity needs were imported from Romania through OPCOM. Renewable energy plants produced 6% of electricity consumption.
The cost of energy purchased by Energocom from the Cuciurgan Thermal Power Plant is $65-66/MWh. The price of importing electricity from other suppliers to Moldova varies depending on market conditions and trade agreements, and is double the price Chisinau pays at the Cuciurgan Thermoelectric Power Plant.
The situation is further complicated by regional geopolitical tensions. Ukraine has announced that it will not extend the transit contract with Gazprom after 31 December 2024, which raises concerns for Chisinau, especially as this decision could affect gas supplies to the Transnistrian region. Although the Republic of Moldova has given up Russian gas for the right bank of the Dniester, the continuation of electricity supplies from the Transnistrian region remains crucial for the national economy. It is precisely for this reason that it is essential to demarcate the energy crisis in the Republic of Moldova into the two strands mentioned above.
Russia’s position
Gazprom, following negotiations on 26 November 2024 in St. Petersburg with the Ministry of Energy of the Republic of Moldova, underlined that it is not willing to support additional losses for the supply of gas to the Transnistrian region in reverse flow through the TurkStream pipeline and later through the Trans-Balkan pipeline. The Russian Federation, through Gazprom, has started to take into account many changes in the region and is not limited solely to geopolitical calculations. In this respect, the refusal to deliver gas via alternative routes to the Transnistrian region could be a political tactic by Moscow, aimed at destabilising the internal situation in the Republic of Moldova and undermining the population’s trust in the authorities in Chisinau and its European partnerships. The Kremlin could use the Transnistrian region as a geopolitical gambit to create instability in Chisinau and undermine the political and economic state of the Republic of Moldova, in view of the parliamentary elections scheduled for next year.
The current situation in Moldova’s energy sector shows that Gazprom not only provides gas, but also ideology, with the potential to unite or divide territories, and is an important factor in the political and economic settlement between Chisinau and Tiraspol.
Ukraine’s role
During 2024 Ukraine demonstrated to European energy market players that it does not want to extend its contract with Gazprom. In March 2024, Ukraine’s Prime Minister Denis Shmygal said that while Kiev could extend gas transit to Europe, it would not negotiate directly with Moscow on this issue. This is also in line with the messages of Ukraine’s energy minister, Gherman Galushchenko, who emphasised that Ukraine has no plans to conclude additional agreements or extend the current contract with Gazprom. Moreover, according to him, Ukraine’s gas transport system can exist safely without Russian gas transit.
Ukraine’s prime minister, in parallel with the thesis on the transit agreement, said that Kiev could continue to pump gas from Ukraine’s gas transmission system to other countries even after the contract with Gazprom expires if “the gas will be purchased by interested countries before it is pumped into Ukraine’s gas transmission system”. In this sense, Ukraine would officially transit gas purchased by a third party. Kyiv, although it would not follow any contact with Moscow, would officially transit gas which de jure would already be the gas procured by the interested party. In such a hypothesis, for Gazprom this would mean negotiating direct contracts with the interested countries separately.
At the same time, the question arises as to why Ukraine, from 1 January 2025, would refuse to transport gas to the Transnistrian region through its territory, but at the same time accept the transport of gas through the Trans-Balkan pipeline in reverse mode, which also passes through about 100 km from its territory to the Odessa region? This is due to the fact that in the perimeter of the Trans-Balkan corridor pipeline between the Causeni Interconnection Point (Republic of Moldova) and the Orlovka Interconnection Point (between Moldovatransgaz and Ukrtransgaz now OGTSU) the gas transport pipelines operated by both operators cross the border of the Republic of Moldova with Ukraine 8 times and there are no nodes for measuring the volumes of gas transported.
At the same time, the transport of gas in reverse mode through the Trans-Balkan pipeline changes the final point of delivery of gas by Gazprom, which will no longer be the border with the Republic of Moldova, but the border with Ukraine. Thus, Vestmoldtransgaz (the operator of the gas transmission system of the Republic of Moldova as of 19 September 2023) will have to increase the gas pumping capacity at the connection points with Ukraine. However, the issue of gas transit through Ukraine to supply the Transnistrian region, as part of the reverse side of the Trans-Balkan gas pipeline, is once again arising. One possible solution would be to move the gas delivery point to Romania or for the Republic of Moldova to accept the risks of transit through Ukraine.
Conclusion and alternative scenarios
The issue of energy security almost always forms a complex and broad interdependence. On the other hand, due to the existence of such interdependence, energy issues must inevitably be considered through the prism of economic and political issues. Should the Transnistrian region run out of natural gas after 1 January 2025, the Cuciurgan Thermal Power Plant will switch from gas to coal. The coal reserve is expected to be sufficient for about 50 days. In this scenario, humanitarian, budgetary and social institutions will be prioritised for electricity supply. For industry, only essential enterprises will be supported.
In the event of interruption of gas transit through Ukraine at the Sudzha interconnection point, the increased capacity of the Trans-Balkan reverse-flow pipeline in September 2024, together with the Iasi-Ungheni-Chisinau gas pipeline, will be sufficient to cover the total consumption of the Republic of Moldova, including the Transnistrian region. The technical possibility to supply gas to the left bank of the Dniester exists. However, some steps need to be taken to utilise the alternative infrastructure, with the risk of higher energy prices.
With the interruption of electricity supply from the Cuciurgan Thermoelectric Power Plant, Moldelectrica will be forced to request Transelectrica in Romania to use consumption islands in order to increase the commercial capacity of importing electricity from Romania’s energy system, again with the risk of increasing energy prices.
We can assume that the parties involved in Moldova’s energy equation will find a modus operandi and a compromise solution in which the costs of alternative energy infrastructure are shared equally.
I emphasise once again that the current situation in the energy sector of the Republic of Moldova demonstrates the critical interdependence of the energy infrastructure between the two banks of the Dniester. The Republic of Moldova will still have natural gas and electricity after 1 January 2025. There are alternative solutions, but against the backdrop of regional geopolitical antagonism, we can expect price increases.