Moldova halved natural gas consumption since 2021

Moldova halved natural gas consumption since 2021
/ bne IntelliNews
By Iulian Ernst in Bucharest November 24, 2023

Moldova’s natural gas consumption (chart) dropped to 647mn cubic metres in 12 months to September 2023, 39% less than in the previous 12-month period and only 53% of the consumption in the 12-month period to September 2021.

While the country managed to procure gas at more affordable prices recently, they will never return to the levels seen before 2021 and public policies — subsidies but also incentives for investments in energy efficiency — aimed to support industrial sectors are key to prevent further economic contraction.

Compared to the period before September 2021, the residential natural gas consumption decreased by 42% to 267mn cubic metres (43% of the total) in the 12-month period to September 2023 while the non-residential natural gas consumption contracted by 51% to 371mn cubic metres (57% of the total).

Despite much less natural gas imported, the country’s gas bill exceeded $1bn for the most recent 12 months to September 2023. This is five times more compared to the 12-month period to September 2021, before the political tensions with Russia resulted in the renegotiation of Moldova’s contract with Gazprom.

This was because the average price paid in the most recent 12-month period exceeded $1,000 per 1,000 cubic metres, nearly four times more than the $268 before September 2021.

After several quarters of the new contract with Gazprom, Moldova switched to the free market to avoid more political pressures. The high prices in Europe during the 2022-2023 winter season pushed up Moldova’s gas bill above $1bn.

More recently, the average natural gas price paid by Moldova dropped to $568 per 1,000 cubic metres in Q3 2023, from $1,653 in Q3 2022, but it is still nearly twice the $310 price paid in Q3 2021.

The government assured that it has contracts at reasonable prices for the coming winter season.

While the import prices have moderated from the spike in autumn-winter of 2022-2023, Moldova’s consumption will perhaps remain low as the prices are still historically high, and not likely to fall further. This will result in a moderately high energy bill, but scarce gas resources for the non-residential sector. On the upside, this will force structural reforms and encourage energy efficiency investments.

The shift from preferential to market prices has already resulted in better allocation of energy towards the value-added segments of the economy. Moldova’s economy contracted by 5% in 2022 and may further deteriorate marginally this year, but this is still a fraction of the radical contraction seen in the internal consumption of natural gas. Roughly speaking, the natural gas intensity decreased by some 40%, partly as waste was reduced and partly as key energy-intensive industries were shut down.

Data

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