The shareholders of Romanian natural gas transport system operator Transgaz approved on Monday, October 5, the transaction with the European Bank for Reconstruction and Development (EBRD) for a 25% stake in Vestmodltransgaz.

EBRD will get this stake following a EUR 20 mln contribution to Vestmodltransgaz's capital while Transgaz will reduce its stake.

Vestmodltransgaz is a subsidiary of Transgaz set up for developing the Ungheni-Chisinau gas pipe that links the Romanian border with the heavily industrialized region around Moldova's capital.

The pipeline can supply the entire amount needed by Moldova, via the Iasi-Ungheni connector previously developed by the Governments of Romania and Moldova.

At this moment, a couple of weeks after it was commissioned, the pipeline is empty and not likely to transport any significant amounts soon.

Moldova's main natural gas transport and distribution group, Moldovagaz - controlled by Gazprom - is negotiating a new three-year contract with the Russian parent group.

Furthermore, Moldovagaz is also seeking an arrangement with Ukraine to store natural gas for the winter period.

At this moment, Transgaz's pipeline only increases Moldova's bargaining power for negotiating lower prices with Gazprom while the commercial dividends are uncertain.

Given the circumstances and terms of the EBRD-Transgaz deal (as disclosed so far), Transgaz aims to make the business commercially feasible with EBRD's help and buy back the stake afterward.

The deal includes a put option in EBRD's favor, whose terms haven't been disclosed.

(Photo: Transgaz.ro)

iulian@romania-insider.com