August 26, 2013 / 4:47 PM / in 4 years

New Europe pipeline to curb Moldova's need for Russian gas

* Pipeline can provide up to one third of Moldova’s needs

* Commission providing seven million euro grant

BRUSSELS, Aug 26 (Reuters) - Moldova will move closer to cutting its complete reliance on natural gas from Russia on Tuesday, with the inauguration of its first pipeline link to European Union supplies.

To curb Russia’s dominance of the European energy market, the European Union has been working to diversify its own sources of gas and also those of neighbouring states.

“This is a historic day - we are celebrating that Moldova will be directly connected to the EU gas market. This will enhance its energy security and reduce its dependence from the only supplier it has now,” EU Energy Commissioner Guenther Oettinger said in a statement ahead of Tuesday’s inauguration.

EU efforts to reduce Russia’s control have soured ties between the bloc and Moscow, while tensions simmer with the former Soviet states.

A pricing dispute between gas transit nation Ukraine and Moscow in early 2009 led to severe disruption of shipments to EU consumers.

Gas supplies to western Europe via Moldova were also briefly interrupted in January 2006, again because of a pricing row, but that was a minor disruption compared with impact of the Ukraine disagreement.

Oettinger will inaugurate the pipeline linking Iasi, Romania to Ungheni, Moldova, together with the two prime ministers in Moldova on Tuesday - the day Moldova commemorates independence from the former Soviet Union.

The European Commission is providing seven million euros ($9.38 million) out of the total pipeline cost of 28 million.

With a maximum transportation capacity of about a billion cubic metres per year, the pipeline will be able to provide up to one third of Moldova’s gas consumption from the end of 2014, the Commission said.

Moldova, which is sandwiched between Romania and Ukraine, is not a member of the European Union, but is part of the EU Energy Community, which seeks to extend the EU energy market to neighbouring countries through legislation and physical pipeline connections.

After years of wrangling with Moscow over how much it has to pay for gas, Ukraine has begun replacing Russian gas with cheaper fuel bought on the European spot market.

$1 = 0.7461 euros Reporting by Barbara Lewis, editing by William Hardy

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