Moldova expects a long, hard road ahead in the battle against Gazprom’s demands to pay more than $700 million in alleged debt for past gas supplies, dating from 1995.

An independent audit, ordered and paid for by the Moldovan government, said that Gazprom’s 50%-owned gas supply subsidiary in the country, Moldovagaz, had been unable to provide documents for part of the claimed debt.

The repayment would be nearly 5% of Moldova’s gross domestic product, which was estimated at $14.4 billion in 2022.

The audit also found that about $400 million of the debt came from arbitral awards in Russia whose validity has expired, and that thus cannot be enforced.

Moldovagaz and Russian gas giant Gazprom disputed the findings, saying the report “cannot in any way influence the amount and validity of the wanted debt repayment”.

Moldovan Energy Minister Viktor Parlikov told Chisinau-based news outlet Agora that the authorities are not ready to back down and acknowledge and pay the debt. He told a press briefing this week that Moldova is willing to send Gazprom just $8.6 million to settle the matter.

Moldovagaz said it is “perplexed” by the $8.6 million figure, claiming that just two big Moldovan government-controlled utilities owe the supplier $46 million — which is “confirmed by documents”.

Parlikov acknowledged that the argument will have to be settled in an arbitration court in Moscow, rather than in European courts, where Gazprom is already facing claims from European companies for its refusal to supply gas last year.

Auditors said in their report that Gazprom won all the arbitration cases in Moscow that it brought against Moldovagaz before 2020.

Nonetheless, if “the matter of the debt goes to arbitration, even in Moscow, they [Gazprom] have no chance”, Parlikov told Agora.

He expects the matter to proceed to arbitration, as authorities do not expect either Gazprom or the Moldovagaz advisory board to rubber-stamp the independent audit report.

Since the invasion of Ukraine in February 2022 and international sanctions that triggered the mass exit of foreign companies and investors from Russia, arbitration courts in Russia have leant strongly towards supporting claims of domestic companies against their foreign partners.

German industrial gas specialist Linde’s cassation appeal against last year’s arbitration ruling in favour of a Gazprom-led Russian joint venture has just been rejected by an arbitration court in St Petersburg.

Linde’s assets in Russia — which it estimates at $1.1 billion — were impounded after the company announced its withdrawal from a building contract for the Baltic LNG project, led by Ruskhimalliance, a joint venture between Gazprom and privately held player Rusgazdobycha.

The US Department of State has backed the results of the debt audit.

“It should come as no surprise that Gazprom could not substantiate the exorbitant bill that Russia expected the Moldovan people to pay,” it said.

“The US reaffirms its support for… Moldova’s ongoing efforts to diversify its energy sources and ensure a more prosperous and transparent future for its people.”