Moldova refused to pay Gazprom $700 million

On the eve of the heating season, Moscow and Chisinau are whipping up rhetoric about the historical debt for gas supplies to Gazprom. Prime Minister of Moldova Dorin Recean said that Moldova, following the results of the audit of the debt to Gazprom in the amount of $709 million, does not intend to pay it, offering to pay only $8.6 million. Gazprom did not agree with the results of the audit, considering them irrelevant, and intends to defend their rights “by all possible means.”

Moldova is ready to recognize only $8.6 million of the $709 million debt to Gazprom for gas supplies and does not intend to pay “for non-existent debts,” Moldovan Prime Minister Dorin Recean said on September 6, referring to the results of an external auditconducted by Norwegian Wikborg Rein Advokatfirma and British Forensic Risk Alliance&Co.

Dorin Recean noted that Moldova is ready for dialogue on debt, including through international arbitration.

The repayment of the historical debt of Moldova (excluding Transnistria), which Gazprom, together with penalties and fines, estimated at $709 million (the body of the debt was $433 million), was a key condition prisoner in October 2021, a five-year contract for the supply of 3.3 billion cubic meters of gas. At the talks, according to Kommersant’s interlocutors, Gazprom offered Moldova to pay off the body of the debt in three years, and the rest in two more. At the same time, the parties agreed to conduct an external audit of the debt. Disputes of the parties, according to the contract, should be considered in the International Commercial Arbitration at the Chamber of Commerce and Industry of the Russian Federation.

In November 2022, Gazprom shortened halving gas supplies to Moldova through Ukraine, explaining this by the blocking by the Ukrainian side of one of the two entry points to the export pipeline. The reduction in gas supplies and damage to power plants in Ukraine, which supplied about 30% of electricity to the country, provoked an acute energy crisis in Moldova last winter. In August, Russian gas supplies to Moldova through the Ukrainian corridor amounted to only 5.4 million cubic meters per day (including Transnistria) against the contractual 9 million cubic meters, Evgenia Popova from Implement notes. Now deliveries have fallen to 4 million cubic meters per day.

“All gas from the end of 2022 is sent to Transnistria, where there are no alternatives to Russian gas,” she recalls. Right-bank Moldova does not currently consume gas from the Russian Federation.

The auditors hired by the Moldovan authorities came to the conclusion that out of the $756.6 million debt to Gazprom as of October 31, 2021, there are no supporting documents for $278.16 million (we are talking about debt accumulated before 2003). The main part of this amount – $ 275.9 million – is a debt to Faktoring-Finance, which Gazprom assigned to its subsidiary. This, according to the auditors, gives “Moldovagaz” the right to demand the write-off of this debt. Of the remaining amount of $478.42 million, about $400 million were recognized only by the Russian arbitration court (we are talking about the decision of the arbitration at the Chamber of Commerce and Industry of the Russian Federation), the decisions of which Moldova is no longer obliged to comply with, which gives Moldovagaz the right to write off this part of the debt, the auditors believe.

In addition, from January 1, 2011 to December 31, 2020, Moldovagaz invested and incurred expenses in the amount of $143 million, which were not approved by the National Energy Regulatory Agency (ANRE) for inclusion in the tariff. “If these expenses could be avoided, more funds could be allocated to pay off the debt. Since Gazprom, which is the majority shareholder of the Moldovan company, approved these expenses, Moldovagaz may demand that this part of the debt be written off as well,” the report says.

According to the auditors, Moldovagaz may file a counterclaim against Gazprom in the amount of about $160 million for lost transit revenues paid by Gazprom to Tiraspoltransgaz-Pridnestrovie in violation of the agreement between the two companies.

Gazprom noted that the auditor’s report did not pass the approval of the Supervisory Board of Moldovagaz, as was stipulated by the agreements.

“The auditor’s conclusions cannot in any way affect the size and validity of the said debt, especially since it is confirmed in the documents regularly signed by Gazprom and Moldovagaz and in the relevant decisions of international arbitration,” they say. companieswhich intends to “defend its rights in every possible way.”

According to Sergey Uchitel, a partner at the Pen & Paper Bar Association, Gazprom has several options: try to settle the dispute out of court, file a lawsuit in arbitration, or limit or completely stop gas supply. “Whatever path is chosen, one should not expect a quick settlement of the disputed situation,” he believes.

Gazprom has already threatened to cut off the gas supply to Chisinau due to regular delays in payments, but then the main blow will be dealt to the gas supply of Transnistria. According to Moldovan Energy Minister Viktor Parlikov, Moldovagaz will be able to supply gas to Pridnestrovie if supplies from Russia stop. “Even if Moldova succeeds in replacing supplies from Russia, it will not be painless for the economy,” notes Evgenia Popova. “The volume of supplies from Romania strongly depends on the country’s gas balance, and many countries apply for the IGB interconnector, especially the issue of non-payments, which Moldova justifies high gas prices may rise in this case as well.”

Tatyana Dyatel