The European Bank for Reconstruction and Development (EBRD) arranged a financial safety net of $50 million to help Moldova secure gas supplies for the coming winter in the event of emergency shortfalls, the EBRD said Wednesday.
Moldova, which relies on gas from Russia via Ukraine and has no storage for the fuel, faces the risk of disrupted supply should Russia and Ukraine fail to extend a gas transit agreement that expires on Dec. 31, 2019.
Under the agreement signed on Wednesday by Moldova’s Prime Minister Ion Chicu and EBRD Managing Director for Eastern Europe and the Caucasus Matteo Patrone, the EBRD will issue an on-demand, a standby letter of credit of up to $50 million to guarantee payment obligations of the Moldovan state energy importer Energocom.
The financial arrangement will enable Energocom to purchase one month of natural gas supplies from Naftogaz, the national oil and gas company of Ukraine, to avoid any gas supply risks.
Naftogaz will procure, through open tenders with European Union suppliers, up to 0.4 billion cubic meters of gas, which will be delivered to Energocom and distributed to customers in Moldova by the national gas distribution company Moldovagaz.
As the long-term transit agreement between Ukraine and Russia expires at the end of this month, Moldova may be left without gas if supplies cannot be arranged.