Gazprom keeps extending long-term contracts with countries of South-Eastern Europe.
On November 25, Serbian President Alexander Vucic met with Russian President Vladimir Putin in Moscow and said that the two agreed on gas costs at $270 per one thousand cubic meters for the next six months. This was also the previous price level. Serbian authorities are encouraged by the outcome of Vucic's visit to Russia, rejoicing over the successful gas deal and Europe's lowest gas price. And yet, for neighboring Belarus Gazprom's gas is even cheaper. And China paid some $170 per a thousand cubic meters, as of the third quarter. But it is the Russian giant's special Asian partner and so far the only APR country getting pipe gas from Russia.
The situation being what it is, $450 (per one thousand cubic meters), which follows from the recently re-signed deal with Moldova, looks very high. Naturally, there will be those in Europe seeking to accuse the Russian gas giant of using political pressure and price diversification for political reasons. It is important to bear in mind that the current gas agreements between Moscow and Belgrade are situational (and Moldova does already have a new long-term contract). And they will remain in force until the parties get done with discussions on a new long-term agreement. Moreover, the Serbian leader is confident that contract conditions will be "exceptional", too.
Notably, the low price for Russian gas is generally proportional to the level of friendship and political alliance with Moscow. And given the personal high-level contacts, the leaders of Russia's adept states (a while back, the Serbian gas "case" was preceded by the Belarusian one) manage to ensure preferential energy prices that are noticeably lower than the global average.
But even Moldova, whose incumbent authorities are by no means supportive of any political rapprochement with Russia, still received a fairly reasonable contract gas price. At least, this price is more than twice lower than European hub quotes of above $1,000 per one thousand cubic meters. There is also a certain amount of humanism here, with Gazprom apparently considering not only the republic's business goals, but also its backward socio-economic parameters. But even for relatively cheap gas, finding money is still challenging for Chisinau.
Thus, Gazprom's supplies to Moldova under a new advantageous contract could have been interrupted over payment delay by Moldovagaz JSC. The planned current payment deadline expired on November 22, with Gazprom having officially notified the counterparty that gas supplies will be halted in 48 hours unless it pays for gas consumed in October and in the first half of November.
The payment didn't come by November 24, as Moldovagaz simply failed to consolidate the required amount in time. And then the Moldovan authorities requested an official deferral until November 26. Gazprom showed "good will" and made advances. As a result, Moldovagaz received the necessary amount from the republican budget. And late on November 26, $74 million hit Gazprom's account. The problem seems to have been resolved, but the Russian party finds the situation far from normal. Immediacy is vital as regards future tranches from Moldova, while its financial and economic situation remains depressing, which raises the risks of payment disruptions for Russian gas. Gazprom will unlikely make such concessions further on, as they run counter to business principles. So Moldovagaz should plan its financial policy more clearly. The Moldovan side has less than a month left to consolidate the next tranche to Gazprom.
Returning to the Serbian gas "case", it is worth noting the increasingly larger role of Russia's TurkStream pipeline across the Black Sea. January 1 featured the beginning of Russian gas supplies to Serbia's gas transportation system via Bulgaria from the TurkStream. And the long-term agreements signed by Gazprom and Hungary in late September for the supply of 4.5 billion cubic meters per year (over the next 15 years) stipulate that an annual 3.5 billion cubic meters of gas will flow from the Turkish Stream through Serbia, with only 1 billion coming from Austria.
On October 1, gas began to flow to Hungary through the territory of Serbia from the Balkan Stream gas pipeline receiving gas from the TurkStream system.
And in early November, Gazprom increased gas supplies to Bulgaria on terms beneficial for the republic, following an appeal by the Bulgarian authorities. This came in a Facebook statement by the Russian Embassy in Bulgaria. In November, gas costs for that country were noted to have decreased to values about twice lower than the average European.
The Balkans remain in the range of Moscow's geopolitical interests. Russia also places high strategic stakes on the energy model of cooperation with countries of the peninsula, which is based on the TurkStream system and long-term gas supply contracts. Hence the loyalty of Gazprom in coordinating natural gas prices with partners in the region. And Brussels virtually has nothing to field against Moscow in the battle for the Balkans – the European bureaucrats are only armed with a strong desire to lead the Balkan states astray, and promises of financial assistance.
Think of autumn 2020, when the European Commission's economic investment plan was vigorously discussed to favor the Western Balkans (which include the former territories of Yugoslavia as represented by Serbia, Montenegro, Macedonia, Bosnia and Herzegovina, Kosovo, and Albania), involving the allocation of 9 billion euros in 2021-2027. The EC report stressed that the funds will be used to support economic rapprochement with Brussels (this particularly refers to forcing the transition to "green" and digital technologies). However, this financial assistance plan may well be greatly depreciated or alienated over coronavirus-caused and energy problems within the EU. An elegant example shows that amid the energy crisis this fall, the EU leadership proposed no plan for any field-specific centralized assistance to the most vulnerable members of the alliance. Anti-crisis sessions in the European Parliament ended up with mere pleas to EU countries' authorities for subsidizing low-income citizens' energy bills. And don't even ask about the fate of the applied "Balkan" investment plan of Brussels.