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Moldova will pay Gazprom Sept. advance due to cutoff fears

St. Petersburg International Economic Forum (SPIEF)

CHISINAU (Reuters) -Moldova is poised to make a payment to Gazprom for this month's gas supplies to alleviate fears the Russian gas giant could reduce or cut supplies from Oct. 1, Deputy Prime Minister Andrei Spinu said Monday.

"In the very next few days, Moldovagaz will pay Gazprom an advance in the amount of $33.89 million for the month of September," Spinu said in remarks broadcast on Pro TV Chisinau.

The state gas company has paid Gazprom for August, but a senior company source previously told Reuters it is struggling to make its 50% advance payment for September amounting to $33.89 million.

One of Europe's poorest countries, Moldova is reliant on Russian gas. Hit hard by the surge in gas prices since Russia's invasion of Ukraine, Moldova also has Russian troops and peacekeepers based in its Transdniestria breakaway region.

Russia calls its actions in Ukraine "a special military operation."

MOLDOVA EXPLORING OTHER ENERGY SOURCES

Earlier, President Maia Sandu said Moldova was looking at alternative energy sources. "We have no confidence that Gazprom will continue supplying gas to Moldova after Oct. 1. From this date, the price for Moldova under the current contract should be significantly lower," the pro-Western leader said.

"In case supplies are reduced or stopped, we are looking at the possibility of supplies of energy resources from alternative sources," she said.

Spinu said Moldova might not know about a supply cut until "the very last moment." But in that event, he said Moldova would receive gas at market prices through the Iasi-Chisinau pipeline which runs from neighbouring Romania. Transdniestria would receive gas on advance payment from Moldova, he added.

"We are not worried about October," he said, adding there were more than 30 million cubic metres of gas in storage facilities in Romania and that gas consumption would fall in October due to a switch to fuel oil.

Spinu also noted that a loan from the European Bank for Reconstruction and Development to buy gas from alternative sources would suffice for 170 million cubic metres of gas.

Sandu did not say why Gazprom might reduce or cut supply. State-controlled Gazprom, which has reduced gas supplies to Europe since Russia invaded Ukraine in February, did not immediately comment on her remarks.

Moldova has previously said Gazprom could cut off gas if one contractual condition is not met - completion of an audit of its accumulated debt for supplies estimated at $709 million.

The gas price in Moldova fluctuates from month to month based on the spot price for gas and oil. But from Oct. 1, the formula used to calculate the price will change.

Currently, the gas price formula is 70% based on the spot gas price, which is very high, and 30% on the oil price. From Oct. 1, the formula will change to be 70% based on the oil price and 30% on the spot gas price.

Thousands of protesters have gathered in Chisinau over the last two weekends, demanding the resignation of Sandu and her government and complaining of high inflation and fuel prices.

(Reporting by Alexander Tanas; Writing by Tom Balmforth and Elaine Monaghan; Editing by Timothy Heritage, Jane Merriman and Josie Kao)