The first signs of gas supply problems have emerged in Europe, with Moldova’s breakaway Transnistria region warning of short supply. Chances are the situation will deteriorate further unless Middle Eastern LNG flows resume soon—at the moment, a highly unlikely scenario.
Transnistria, also called Transdniestria and Pridnestrovie, is a pro-Russian region of Moldova that broke away from the former Soviet republic in the early 1990s. The Russian-speaking region, until recently, received natural gas from Russia essentially for free—and generated electricity that it also supplied to Moldova. That ended in 2024, when Ukraine refused to extend a gas transit contract with Russia’s Gazprom. The end of that contract caused a severe gas shortage in Transnistria, until it switched to European gas suppliers—at a higher price.
The breakaway region has been getting its gas from Europeans since then, but now, with the ripple effect from the Middle Eastern war becoming increasingly visible, there has been a reduction in the availability of volumes, according to a Reuters report.
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“In connection with events in the Middle East, there have been critical disruptions in gas supplies,” Transnistria’s economic development ministry said, adding that “Sharp cuts in gas volumes have led to limits on usage for commercial purposes or thermal heating.”
Interestingly, the report also cited the speaker of Moldova’s parliament as saying that Transnistria only had gas for several days, adding, “Let me ask them what they choose – gas every day, even if more costly, or to go without for schools, kindergartens or homes?” The question would suggest the availability of gas is only a matter of solvency rather than a tight supply.
However, gas prices in Europe have doubled in less than a week, with the TTF benchmark intraday contract topping 60 euros per megawatt-hour earlier this week. As of Wednesday, the TTF price for the April futures contract was 48.77 euros per megawatt-hour.
The gas price surge followed Iranian strikes on Qatari LNG production facilities, which prompted QatarEnergy to shut down its entire LNG production system. A couple of days later, the company declared force majeure on LNG exports. Since Qatar accounts for a fifth of global LNG flows, the developments immediately hit prices.
Europe is the continent most vulnerable to gas supply shocks. Since cutting its reliance on Russian pipeline gas, the European Union has become heavily dependent on seaborne LNG imports, with Qatar among its largest suppliers. Some observers have noted that there is plenty of American liquefied gas to go around, but it will not be going around at a price set by the buyers. With Qatar’s LNG production suspension, the market for liquefied gas has fallen under the total control of sellers, meaning European gas importers are in for more inflationary pain.
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Small EU members and other European countries, such as Moldova, are, in a sense, more vulnerable to gas shocks because they are poorer than the big EU economies, meaning they have less flexibility with gas supplies. However, the effect of another gas crunch may be arguably more devastating to these latter, big economies, such as Germany, that are considered the backbone of the European Union, of which Moldova aspires to become a member by 2030.
Qatar supplies between 12% and 14% of the European Union’s natural gas. “Europe is far less dependent on Gulf oil and LNG than China, India, Japan or South Korea, but it is not insulated,” energy think tank Bruegel noted. Alas, less direct dependency does not mean less price dependency. Whether it likes it or not, Europe is going to feel the pinch from LNG flow disruption from Transnistria to the UK.
By Charles Kennedy for Oilprice.com
