Gas

State of compliance

Moldova took further steps in drafting and adopting the by-laws stipulated in the Law on Natural Gas. The Law transposed the vast majority of Third Energy Package provisions, with significant technical and institutional support from the Energy Community Secretariat. Nevertheless, the most important acts, which would enable genuine third party access and market opening, are still in draft form.
 

  • Unbundling

    Unbundling

    The Law on Natural Gas establishes the unbundling requirements for transmission system operators and certification procedures in compliance with the Energy Community gas acquis. Moldova enjoys a derogation granted by the Ministerial Council for Third Package compliant unbundling and certification until 1 January 2020.

    Moldovatransgaz and Tiraspoltransgaz, both daughter companies of Moldovagaz, are not unbundled yet. Tiraspoltransgaz operates a transmission system on the left bank of the Dniester River.

    In 2019, the owner of the two transmission system operators, Moldovagaz, drafted an unbundling plan and submitted it to the Moldovan energy regulatory authority (ANRE) for approval. The plan was equivocal as it did not clearly define the unbundling model, and as such could not be implemented and had to be rejected. Therefore, a new unbundling plan, opting for an independent transmission operator model (ITO) was produced in cooperation with the Secretariat in August 2019 and is under discussion as of now.

    Vestmoldtransgaz, an emerging transmission system operator, was sold to Romanian Transgaz and is not certified yet.

    The Law on Natural Gas also transposes the unbundling provisions for distribution system operators including the exemption for the ones serving less than 100.000 customers.

    Chisinau-Gaz, a 100% subsidiary of Moldovagaz, is the only distribution system operator out of the 25 licensed distribution system operators in Moldova, which exceeds the threshold of 100.000 connected customers and is thus required to be legally and functionally unbundled. As of today, it does not perform any activities unrelated to distribution of natural gas. Its functional unbundling, in particular as regards organisational and decision-making relations with the sole shareholder, is yet to be verified.

  • Third Party Access

    Third Party Access

    The Law on Natural Gas transposes the principle of third party access on the transmission, distribution and storage networks of Directive 2009/73/EC.

    A transmission tariff methodology for the individual setting of tariffs for entry and exit points as requested by the Law has not been adopted. ANRE, in cooperation with the Energy Community Secretariat, finalised a draft entry/exit transmission tariff methodology, which was subject to a public consultation.

    The Law requests that the capacity allocation are performed on monthly and yearly basis (the latter up to five-year). Interruptible capacity is offered in case of contractual congestion. Secondary market trade of capacities is also in place. In spite of the Regulation on Access to the Natural Gas Transmission Network and Congestion Management in place, this act fails short of implementing the said principles in practice. Moldovatransgaz thus effectively denies third party access to users which do not belong to its owners’ shareholders.

    ANRE and the Secretariat prepared fully compliant transmission and distribution network codes for Moldova two years ago. However, none of the codes have been adopted so far. A provision in the Law stating that transmission and distribution system operators shall give priority to natural gas produced on the territory of Moldova contravenes the general principle of non-discrimination, regardless of the scarce domestic gas production.

    Nevertheless, some progress has been made as ANRE adopted a widely complaint code on connection to the girds for both transmission and distribution, as well as a regulation on the development of grids.

  • Wholesale market

    Wholesale market

    Moldova’s gas market is monopolized. Major gas market activities in the country remain concentrated within the corporate group of one vertically integrated company – Moldovagaz. The company is responsible for gas imports from Russia and exercises control over the country’s two gas transmission system operators, Moldovatransgaz and Tiraspoltransgaz.

    The gas market of Moldova is illiquid.  More than 99% of contracted gas import quantities are being acquired from Gazprom.

    The Regulation on Access to the Natural Gas Transmission Network and Congestion Management established some rudimentary principles of balancing. The draft gas market rules have been finalised and prepared to undergo a public consultation.

  • Retail market

    Retail market

    Through its twelve subsidiaries, Moldovagaz controls about 70% of Moldovan gas distribution networks, and it also acts as a major retail supplier.

    All customers are eligible to freely choose and switch their gas supplier. In practice, however, only incumbent suppliers are active in the market. Rules and procedures for supplier switching are adopted. ANRE adopted widely complaint supply rules with standard contracts for supply. End-user price regulation is applied to all customer categories.

    Household customers and small enterprises are entitled to regulated gas supplies by the supplier under public service obligations. The Law envisages a concept of last resort supplier for all final customers. Operational rules regulating the supply of gas under public service obligations are yet to be developed and a supplier in charge has to be designated.

    In contrast to these general principles, the Law effectively and unduly allows that all final customers can benefit from gas supplies under regulated prices without restrictions in time and clearly defined and transparent rules, thus making the Law non-compliant with the Directive’s provisions on public service obligations.

    The Law on Natural Gas transposes the requirements of Directive 2009/73/EC with regard to customer protection. It introduces the concept of vulnerable customer and refers to the relevant social security regulations in the definition.

    Moldova’s Government adopted a resolution on emergency measures, a preventive plan and risk assessment of security of gas supply. With this, it transposed security of supply acquis, even beyond Energy Community law.

  • Interconnectivity

    Interconnectivity

    The transit of Russian gas to Turkey and the Western Balkans (via the Trans Balkan pipeline) takes place in Moldova. The amount of gas transported through Moldova is around 20 bcm/y.

    Diversification of gas supplies in Moldova primarily depends on making operational its interconnector with Romania through the Iasi-Ungheni pipeline, which is progressing on the Moldovan side, and in particular on its projected extension to Chisinau. Vestmoldtransgaz was sold to Transgaz in 2018 with the obligation of the latter to invest in the Ungenhi Chishianu pipeline (PMI Gas_18). The other option is opening reverse flow supplies on the Trans Balkan pipeline (PECI GAS_25), which is still not possible along the pipeline’s entire route.

    Regulation 703/2015/EU (the ‘interoperability network code’) is not transposed nor implemented in Moldova yet. The Energy Community is assisting Moldovatransgaz in concluding an interconnection agreement with Ukraine in line with this code.