The European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) will lend €41mn each and the European Union will add a €10mn grant to fund a pipeline to link the Romania-Moldova interconnector with the Chisinau region, the EBRD said in a December 19 statement. 

The pipeline will allow full utilisation of the existing Iasi-Ungheni interconnector with Romania, linking Moldova’s economically active regions to the European gas transportation network. The project is aimed at enhancing Moldova's energy security by diversifying its gas supply sources. At the same time, the pipeline will help the Romanian gas producers Romgaz and OMV Petrom, which saw lower revenues from gas sales in 2016 as domestic demand weakened.

The EU Ambassador in Moldova Pirkka Tapiola commended the €92mn financing, which was sealed in Chisinau by government officials and representatives of the two banks on December 19.

As part of the new financing package, the Moldovan government has agreed to implement a comprehensive reform package to promote the liberalisation of the energy market and strengthen competition in the sector, the EBRD said.

The money will be given to Vestmoldtransgaz, a 100% state owned company specially set up for this purpose to bypass the Gazprom-operated national gas operator involved in financial complications due to the transfer of gas to the Moldovan separatist republic of Transnistria, which does not pay for gas deliveries.

The new 120km pipeline will have a diameter of 600mm and capacity of 1.5-2.0bn cubic metres (cm) per annum. This will almost totally eliminate Moldova’s dependence on Russian gas.

Construction of the Ungheni-Chisinau natural gas pipeline will start in 2016 and will be completed in May 2018, Vice-Minister of Economy Valeriu Triboi told a press conference on October 9, quoted by noi.md.

Moldova consumes around 1.2bn cm of gas per year, while pro-Russian Transnistria - where large part of Moldova’s industry is concentrated - needs another 1bn cm of gas per year. Currently, almost all Moldova’s natural gas is imported from Russia.