BUCHAREST (ICIS)--International gas companies can start booking transit capacity in Moldova as the gas incumbent has approved standard transmission contracts to allow entry and exit in line with EU regulations.
Speaking to ICIS, Vadim Ceban, president of the board of directors at Moldovagaz, a company partially owned by Russia’s Gazprom, confirmed the agreements have been approved and said shippers can book monthly capacity along the Trans-Balkan pipeline starting from July.
The transit capacity is expected to exceed 8 billion cubic metres and will be allocated on a first-come-first-served basis this year.
Ceban said there were plans to work with the Ukrainian transmission system operator, GTSO, to auction bundled capacity on the regional Hungary-based RBP platform from next year. The capacity would be allocated for physical flows, but there are plans to also offer backhaul .
ICIS understands that at least five international companies are in the process of signing the contracts with a view to either export natural gas from Ukraine to Romania or the Balkan region via Moldova, or to import volumes into Ukraine from southeast Europe or Turkey.
The Moldovan regulator ANRE is yet to define the entry and exit points on the Ukrainian-Moldovan border as well as change the methodology for the calculation of transit tariffs.
Regional market sources said transit tariffs may be sharply reduced from 1 August 2020.
Two sources close to discussions told ICIS that contracts were drafted in English, Romanian and Russian and noted that they would be signed by three parties – the actual companies looking to transit gas, Moldovagaz and Moldovatransgaz, the transmission operator, which is expected to be fully unbundled by the end of the year.
In theory, contracts would need to be signed only by the transmission operator, in Moldova’s case the incumbent Moldovagaz is also required to step in.
This is because of political complications related to the status of Transnistria, a breakaway state in a narrow strip of land wedged between the river Dniester and the Ukrainian border that is internationally recognised as part of Moldova.
Although there is an ongoing frozen conflict between Moldova and Transnistria, the issue of gas transit has not raised problems as long as transmission operations were carried out under the umbrella of Moldovagaz.
However, with the pending unbundling of Moldovatransgaz there are questions regarding the status of transmission operations in Transnistria and the possible establishment of an independent TSO, Tiraspoltransgaz. Such an entity is unlikely to be officially recognised and allowed to negotiate transit deals separately since neither Moldova nor Ukraine acknowledge the existence of a separate Transnistrian province.
Nevertheless, reaching a compromise has been important because the transit lines which link Ukraine to Romania and further to the Balkan region also cross Transnistria.
So far, stakeholders have agreed that transit contracts would be signed by Moldovatransgaz for the Moldovan transit section and by Moldovagaz for the Transnistrian part, a source close to discussions told ICIS.
Establishing entry and exit points between Ukraine and Moldova is also proving complex because the transit line cuts in an out of Ukraine and Moldova over 20 times.
EU sources told ICIS that the most likely border points for the direction Ukraine - Moldova would be Grebenyky, Oleksiivka and Lymanskoe. The border points for the direction Moldova-Ukraine would be Kaushany, Oleksiivka and Lymanskoe. Capacity at the Oleksiivka border point may be limited compared to the others.
Moldova has been a key transit country for Russian gas until the end of last year, when a long-term transit contract held by Ukraine with Russia’s Gazprom expired.
Volumes which had been exported to Turkey and the Balkan region via the Trans-Balkan line which transit Ukraine, Moldova, Romania and Bulgaria, have been diverted to the newly-commissioned TurkStream 1 and 2 from January 2020.
This has meant that countries along the route such as Ukraine, Moldova and Romania have lost important transit volumes and revenues as a result of the switchover.
Ukraine and Moldova, both contracting parties of the Energy Community, an EU institution designed to extend the EU’s free market principles to non member states, signed an interconnection agreement in line with EU regulations
However, companies could not book capacity because Moldova was still to approve standard transit contracts and clarify technical issues related to entry-exit points, tariffs, the measurement of gas.
EU officials told ICIS that Moldova has fought hard to retain its transit role despite numerous political difficulties.