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Oil and gas firms invited to bid for deep-water exploration blocks in Bulgarian Black Sea

Out-Law News | 19 Dec 2014 | 4:18 pm | 2 min. read

Potential investors have been invited to bid for oil and natural gas exploration rights on Bulgaria's continental shelf and in the Black Sea by the country's government.

Bulgarian energy minister Temenuzhka Petkova said that the tenders were in line with the government's policy to reduce Bulgaria's dependence on imported energy through increased exploration and exploitation of its own natural gas and oil fields.

"With the tenders opened today, we make another step towards ensuring the diversification of sources of natural gas for Bulgarian consumers," she said.

The Bulgarian government also intends to speed up the construction of interconnectors enabling it to share gas supplies with neighbouring countries, she said.

The tenders relate to Block 1-14 Silistar, a 6,893-square kilometre block on the Bulgarian continental shelf; and Block 1-22 Teres, a 4,032-square kilometre block located in Bulgaria's exclusive economic zone in the Black Sea. Successful bidders will receive a five-year exploration permit. An annual fee of BGN 275,720 (€140,964) will apply to the Silistar Block, and an annual fee of BGN 161,280 (€82,456) will apply to the Teres Block.

US firm Vintage Petroleum International carried out limited exploratory activities in both areas between 2002 and 2007, the Bulgarian government said. The Teres Block was put up for tender again in 2013, although this was ultimately cancelled due to lack of interest from investors, it said.

Last week, the Bulgarian government sent a formal proposal to the European Commission seeking financial support for the construction of a gas hub in the country, according to a statement on its website. The planned hub would act as a receipt and distribution point for Russian gas coming in from the proposed South Stream pipeline, and could also act as a distribution centre for other member states in the region including Greece, Romania, Hungary, Croatia and Slovenia, the government said.

According to the statement, the letter said that Bulgaria's "strategic geographic location" meant that locating a hub in the country would be "an asset of all partners in the EU and the region". The plan could also be implemented in line with EU president Jean-Claude Junker's plans for a 'European Energy Union' "by contributing to improving supply security and diversification of sources and routes", the statement said.

The Commission recently announced that it was setting up a "high-level working group" to coordinate proposals for expanding the EU's gas supply infrastructure, including cross-border projects to diversify gas supplies, following concerns that the Russian government plans to scrap the South Stream project. This project would involve the construction of a 930-kilometre pipeline between Russia and Italy, running under the Black Sea and linking several European countries along the way.

The EU currently imports 53% of the energy it consumers at a cost of more than €1 billion a day, according to Commission estimates. Russia was the source of 33% of the EU's oil imports and 42% of its natural gas imports in 2013.