EU backs Moldova with €60M amid Putin’s gas squeeze

European Commission President Ursula von der Leyen said on Wednesday she was providing Moldova with €60 million to help the country’s pro-EU administration buy natural gas amid a supply dispute with Moscow.

That’s hardly enough to help the country plug the gap after negotiations with Russian giant Gazprom turned sour. But more may be in the pipeline if needed.

It’s not unusual for Russia to exert pressure on neighbors through gas supplies, and these strong-arm tactics were the subject of a major EU antitrust enquiry between 2012 and 2018. In a sign that Moscow is willing to play hardball, Russia gained notoriety for slashing gas flows to Ukraine in 2009 and 2014. Historically, Moscow has also put pressure on Moldova’s attempts at a westward political trajectory by banning its critical wine exports to Russia.

At last week’s European Council meeting, von der Leyen gave EU leaders an account of what she heard from Moldovan Prime Minister Natalia GavriliÅ£a: When the country’s gas supply contract was expiring and up for renegotiation, Gazprom proposed either a formidable price hike, or a longer-term contract with political strings attached, which ChiÈ™inău found unpalatable.

A Commission official said the €60 million would be a grant rather than a loan and that further financing could be released, but declined to provide details.

Gazprom did not respond to a request for comment.

Moldova is now in a state of emergency, with households and businesses being asked to ration gas use. Moldovagaz, Gazprom’s unit in the country, described the situation as “close to critical” due to dangerously low levels of gas in the system.

On Wednesday, Ukraine’s pipeline operator GTSOU sent over 15 million cubic meters (mmcm) of gas to help its Moldovan counterpart maintain the minimum pressure required in its pipelines. It added that while Moldova had previously only ever ordered Russian gas, Ukraine’s extensive network had more than enough room to transport gas purchased from other suppliers and being held in Ukraine, Poland, Hungary, Slovakia or Romania.

“In Ukraine, we are all too familiar with the pressure tactics that can only be described as weaponization of energy and unconcealed blackmail. So when we learned that Moldova had to declare a state of emergency, the GTSOU didn’t hesitate to offer help in the spirit of solidarity,” GTSOU Chief Executive Sergiy Makogon told POLITICO. “Recognizing the new reality where Moldova is looking to diversify supplies, as Ukraine had to do back in 2015, GTSOU is offering a stable route of gas supply. These options are sufficient to cover Moldovan demand fully, and GTSOU stands ready to transport it on a firm basis.”

Moldovan central utility Energocom also launched tenders this week for 5 million cubic meters of gas to help meet daily consumption needs — so far, the Dutch company Vitol, Poland’s PGNiG and the Ukrainian-American supplier ERU Group have won bids.

A stopgap agreement with Gazprom is set to expire at the end of the month, but Moldovagaz warned on October 6 that Russian flows were already below what was needed to power and heat the country.

While Moldova’s deputy prime minister was dispatched to St. Petersburg on Wednesday to try again with Gazprom Chief Executive Alexei Miller, GavriliÈ›a was in Brussels, hoping to deepen ties with the EU and win help.

The Commission’s €60 million is enough to pay for about a week’s worth of Moldovan gas consumption at current rates, experts estimated. The country is currently using between 7 mmcm and 8 mmcm of gas each day, which is expected to rise to between 12 mmcm and 15 mmcm as winter approaches.

The Ukrainian government has agreed to supply additional volumes to Moldova, but details of a framework agreement via state-owned Naftogaz have not yet been published.

Sergiu Tofilat, the former adviser for energy issues to Moldovan President Maia Sandu, said the gas required by the country’s 2.6 million consumers each year is “within the margin of error” compared to neighbors in Ukraine and the EU.

“It would be simple for Moldova to buy gas from these partners to see us through the winter even at current market prices, provided we receive some €600 million in aid money,” Tofilat added.

“We want to have a negotiation with Gazprom, but the agreement should be favorable to our citizens,” a person briefed on the negotiations from the Moldovan side said. “This government will never yield to political interference in our relationship with the EU.”