Russian gas giant threatens Moldova to ditch EU free trade deal for cheap energy supplies

Energy prices soar and EU poses 'joint gas purchase'

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The Russia state owned gas company is asking the former Soviet country to adjust its free trade deal with Brussels in order to receive cheaper gas supplies. The move is being seen as an attempt by Russian President Vladimir Putin to put political pressure on the West in the midst of an energy crisis.

According to the Financial Times, Gazprom also asked Moldova to delay the implementation of EU rules to allow gas markets to be liberalised and be more competitive.

Moldova has declared a state of emergency after its gas contract with Gazprom expired at the end of September and the two sides have not agreed on a price or other details of a new long-term deal.

Gazprom said it would suspend gas exports to Moldova if it did not receive payment for previous supplies and no contract for December has been signed, the Interfax news agency quoted the Russian gas giant as saying on Saturday.

The pro-Western President Maia Sandu’s government was forced to buy one million cubic metres of natural gas from Poland on Monday in a trial purchase to diversify the country’s energy supplies.

Sandu’s government said “a contract was signed for a trial purchase of one million cubic meters of natural gas between the state-owned company Energocom and the Polish company PGNiG”.

“This is the first purchase of gas from alternative sources in the history of the Republic of Moldova,” it said in a statement.

“A trial purchase is carried out to test the possibility of importing gas from alternative sources and to balance the low pressure in the natural gas supply system.”

The government will continue talks with Gazprom this week and ask for a “fair” price, Deputy Prime Minister Andrei Spinu told a briefing earlier on Monday.

Moldova has turned to the European Union and neighbouring Ukraine for help to tackle the energy supply crunch.

Sandu, who favours closer ties with the European Union, defeated her pro-Russian predecessor, Igor Dodon, in a presidential election last year.

The opposition blamed Sandu for the gas crisis, saying she should have gone to Moscow in person to negotiate a new deal.

Sandu said the deal should be negotiated by companies and not the president.

Ukraine has accused Russia of using energy as a weapon against Europe, an accusation Russia strongly denies.

It comes as European Union countries failed to agree on a bloc-wide response to surging energy prices in an emergency meeting of government ministers on Tuesday, with some countries seeking a regulatory overhaul and others firmly opposed.

European gas prices have hit record highs this autumn and remain at lofty levels, prompting most EU countries to respond with emergency measures like price caps and subsidies to help trim consumer energy bills.

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Countries are struggling to agree, however, on a longer-term plan to cushion against fossil-fuel price swings, which Spain, France, the Czech Republic and Greece say warrant a bigger shake-up of the way EU energy markets work.

“There was no agreed position on whether or not intervention measures should be adopted at the EU level and applied in all member states,” Slovenian infrastructure minister Jernej Vrtovec, whose country holds the EU presidency, said after the meeting.

Spain made the case in Tuesday’s meeting for joint gas purchases by EU countries and proposed that individual countries should be able to opt out of the EU’s current system of setting electricity prices.

Those proposals faced resistance from other countries, who are wary of overhauling EU energy laws in response to what they say is a short-term price crunch.

Nine states including Germany – Europe’s biggest economy and market for electricity – published a joint statement ahead of the meeting that said they would not support EU electricity market reforms.

“This will not be a remedy to mitigate the current rising energy prices linked to fossil fuels markets,” the countries said.

The European Commission is analysing the design of Europe’s electricity market and gathering evidence on the behaviour of gas suppliers after some countries accused Russia’s Gazprom of manipulating the market to push up prices.

The Commission will also assess the pros and cons of joint gas buying among EU countries.

“There are many issues to be considered – who will pay for the costs of procuring and storing the gas, how the gas will be transported from the different regions,” EU energy commissioner Kadri Simson said.

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