Oil & Gas

EBRD Invests EUR 20mln in Vestmoldtransgaz

The European Bank for Reconstruction and Development (EBRD) has invested EUR 20mln as part of the capital increase for Vestmoldtransgaz, operator of the newly built Ungheni-Chisinau gas transmission pipeline, within an action aimed to support Moldova in its goal to increase energy security.

Set up in 2014, Vestmoldtransgaz owns and manages the gas pipeline network in the west of Moldova and provides gas transmission services in Moldova. In 2018, it was taken over by Eurotransgaz, a subsidiary of Transgaz, company which operates the Romanian gas transmission system.

The Ungheni-Chisinau gas transmission pipeline, with a length of 120km, will soon become operational and complete interconnection of gas transmission systems in Romania and Moldova by connecting Chisinau to the Iasi-Ungheni interconnection pipeline, between the eastern Romanian city of Iasi and Ungheni, a Moldovan city, at the border with Romania.

The Ungheni-Chisinau gas transmission pipeline will allow Moldova – a country which depends on energy imports at a rate of 90% – to diversify its energy sources.

“As you are aware, in March this year Transgaz and EBRD signed the Memorandum of Understanding on cooperation and support for investments in the energy sector of Romania. The transaction concluded between EBRD and Vestmoldtransgaz (VMTG), Transgaz’s subsidiary in the Republic of Moldova, is yet another confirmation of the active partnership between EBRD and Transgaz, a partnership which expresses the bank’s interest in supporting Transgaz’s strategic investment program in order to develop the interconnection of gas networks in the region, leading to the improvement of safety and security in supply and to the diversification of gas sources. EBRD has assisted VMTG in terms of environmental and social component for the Ungheni-Chisinau gas pipeline project, making sure that the highest standards are observed in the implementation of this project. Between Transgaz and EBRD there is a successful collaboration regarding financing for investment projects and we are convinced that this transaction will contribute to the long-term development of the gas transmission sector in the Republic of Moldova,” said Ion Sterian, General Manager of Transgaz.

“The most eagerly awaited project for the energy security and independence of the country has been completed. I am glad to announce you particularly that construction works at the Ungheni-Chisinau gas pipeline have been completed. I take this opportunity to express my gratitude to the Romanian Government, Transgaz and all partners for the successful involvement in this strategic project for the Republic of Moldova,” stated Sergiu Railean, Minister of Economy and Infrastructure of the Republic of Moldova.

“This interconnection will increase Moldova’s energy security by diversifying gas supply sources, an essential condition for the economic development of the country. The project also helps integrate Moldova in the future major gas infrastructure projects, such as the Trans-Adriatic Pipeline (TAP), as well as the gas sources from hubs in Central Europe, and connects it to Black Sea gas fields. Increasing the degree of integration of European gas markets will allow competition to develop beyond borders, generating important economic benefits for consumers,” added Mr. Alain Pilloux, EBRD Vice-President.

Building Ungheni-Chisinau gas transmission pipeline, worth EUR 90mln, was also supported by a loan of EUR 38mln from the European Investment Bank (EIB) and Eurotransgaz’s own capital investment.

In 2016, EBRD offered to support the project with a loan in favour of the Government of the Republic of Moldova. After Vestmoldtransgaz privatization, financing was cancelled and funds were provided in the form of working interest in this company.

EBRD is the main institutional investor in Moldova. Since the beginning of its operations in this country, the Bank has invested over EUR 1.3bn in 134 projects in the financial, agro-industrial, energy, infrastructure and production sectors in Moldova.

 

Background

On April 24, 2019, Transgaz announced that it had signed all contracts necessary for the construction of Ungheni-Chisinau pipeline, the order for the commencement of works being issued on May 2, 2019.

The completion of Ungheni-Chisinau project, declared of national interest in the Republic of Moldova, involves the construction of a gas transmission pipeline with a length of 120km, three gas delivery stations (two in Chisinau and one in Ungheni) and equipping the steering and dispatching centre in Ghidighici.

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