Gazprom cuts gas to Moldova, transit via Ukraine also at risk

As the agreement for gas transit via Ukraine is about to expire, Gazprom will cut gas supplies to Moldova to zero as of 1 January 2025 due to contractual violations of the refusal to settle the supply debt. This was announced by the Russian company in a statement, as reported by Tass. Gazprom sent a notification to Moldovagaz stating that 'on the basis of the provisions of the contract and the applicable rules of Russian legislation, Gazprom will introduce a restriction on natural gas supplies to the Republic of Moldova to 0 cubic metres per day from 8 Moscow time on 1 January 2025'. Another alternative, for Gazprom, was the continuation of the flow through Ukraine, if Chisinau and Kiev reached an agreement to this effect. Kiev, however, is not open to such an arrangement, since Moldovagaz - the company that transports gas to Moldova - is 50 per cent owned by Gazprom.

On Friday, the gas market was back in turmoil after Vladimir Putin stated that there was now no hope for an extension of Gazprom's transit contract for supplies to Ukraine: 'There is no more time'. The agreement expires on 31 December and a renewal 'is impossible to conclude in 3-4 days, there is no way', the Russian president said.

The price of gas - which had already been under tension for days - rose again, reaching 48 euro per megawatt hour at the Ttf on Friday 27th at the opening of trading. In the following hours, a volatile trend took over, mirroring the strong uncertainties that still affect operators, but the session nevertheless ended up 4.3% at EUR 47.7.

Geopolitical tensions added to the problems of Gasprom, whose sales plummeted: in 2023, the Russian energy giant posted a loss of 629 billion roubles (or $6.9 billion), its worst in decades. In fact, the Russian invasion of Ukraine led to the collapse of sales in Europe, its main source of income. Gazprom's revenues thus fell by almost 30% year-on-year to 8.5 trillion roubles, with gas sales dropping from 6.5 trillion roubles in 2022 to 3.1 trillion roubles. Analysts point out that Gazprom has failed to adapt to the loss of the European market, with revenues from gas sales outside Russia falling from 7.3 trillion roubles in 2022 to 2.9 trillion roubles last year. In contrast, profits from oil, gas condensate and petroleum products rose to 4.1 trillion roubles (+4.3%), too little to offset losses in the core business.