Moldova expecting transit increase, gas sector overhaul in 2021

LONDON (ICIS)–Moldova is preparing for major changes in 2021, expecting to increase its regional transit role and overhaul its gas sector, the president of incumbent Moldovagaz’s managing board told ICIS.

Vadim Ceban said the country may transit over 3 billion cubic metres (bcm) along the Trans-Balkan pipeline next year, more than a fourfold increase on this year’s transit volumes.

He said Moldovagaz, a company partially owned by Russian’s Gazprom, concluded an open season at the end of November and noted that there had been significant interest from shippers looking to transit gas either from Ukraine to the Balkans or in reverse into Ukraine.

TRANSIT CORRIDOR

As of December, there are 16 companies which have or are expected to sign interconnection agreements with Moldova after the country issued its transit contract template earlier this summer.

Moldova has been a major transit corridor for Russian gas until the beginning of this year, when Gazprom diverted exports from the Trans-Balkan route to the newly commissioned TurkStream.

With the switchover, Moldova has lost an important source of revenue which means that transit tariffs increased in order to fund operational costs as well as salaries.

Nevertheless, Moldova has been keen to retain its role as a transit route and is in the process of overhauling its gas sector in 2021, working closely with the Energy Community, an institution designed to extend the EU’s free trade principles to neighbouring countries.

Ceban said if there was high transit interest transmission tariffs would decrease significantly, but he pointed out that he did not see more than 3bcm being shipped across the Trans-Balkan line in the near future.

He noted that if changes are carried out domestically tariffs could become competitive.

SECTOR OVERHAUL

These changes would involve the unbundling of the incumbent, the publication of new tariffs and, possibly, the establishment of a balancing market.

Ceban said plans include the launch of an independent transmission system operator, Moldovatransgaz, setting up an independent supply company and the merger of 12 existing distribution companies into a single entity.

The unbundling of the grid operator was due by the end of the year, but Ceban said documents were being finalised and regulator ANRE was expected to start the certification of the outfit by February 2021. The Energy Community, which has been advising on the process, would also have to certify the new TSO. If all requirements are fulfilled the process should be completed by next summer, he said.

Although the new operator would be an independent company, Moldovagaz may still be involved in organising the transit of gas for companies expecting to ship volumes across the Trans-Balkan line.

Such a model was adopted by Ukraine’s Naftogaz. Naftogaz has been organising the transit of gas for Russia’s Gazprom since the beginning of the year but it is grid operator GTSO who is actually shipping the gas.

BALANCING MARKET

Ceban said the country was mulling the possibility of launching a balancing market once the new grid operator, which would operate it, took over. However, he added that for longer-term products it was interested in joining a regional integrated market.

The Energy Community is in the process of launching SEEGAS, a platform that would help integrate regional exchanges and transmission system operators.

“Moldova is a small market,” Ceban said, noting that around 300 million cubic metres (mcm) could be traded on a potentially competitive market. “This could increase by another 300 million cubic meters/year if we were to include central heating, but that is not going to happen soon,” he added.

Currently, around 100mcm are traded on the free market annually but another 200mcm could be added, excluding central heaters, he said.

Ceban stressed that Moldova, which has been traditionally dependent on Russian gas, was looking to source gas from other countries including Romania or Ukraine but added that price would ultimately dictate where volumes would come from.

The Romanian grid operator, Transgaz, said at the end of November that it had finalised a piece of infrastructure that would link an existing interconnector between Romania and Moldova to the Moldovan capital, Chisinau. Transgaz is the operator of Vestmoldtransgaz, a company that has been set up to operate this infrastructure.

Ceban said new sources of gas would be welcome, but added that the transmission tariffs on the new infrastructure were three times more expensive than those charged by the local operator.