Bulgaria Gives Go-Ahead to Gas Exploration in Black Sea with Total

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Bulgarian government and French oil firm Total S.A. (NYSE:TOT) (Paris, France) signed a contract for oil and gas exploration in the Black Sea. The agreement was inked in Sofia yesterday by Bulgarian Economy and Energy Minister Delyan Dobrev and Total E&P Bulgaria B.V. representative Patrick Pluen.

"We are making a giant leap toward Bulgaria's true energy diversification in oil and gas supplies. It will ensure that future generations will have access to cheaper fuel," Bulgarian Prime Minister Boyko Borisov said after the signing ceremony, as cited by Bulgarian News Agency. Under the five-year contract, Total will explore for gas and oil deposits in the Khan Asparuh block, which spreads over 14,400 square kilometers near the border with Romania. Investments may reach as much as $1.5 billion to fund development if gas or oil deposits are found, Borisov said.

Total S.A. holds 40% of the venture, while Austria's OMV AG (Vienna, Austria) and Spain's Repsol S.A. (Madrid, Spain), each hold 30% of the venture. On July 25, 2012, the consortium received permission to drill for oil and gas at Block 1-21 Khan Asparuh in Bulgaria's Black Sea continental shelf and exclusive economic zone. According to preliminary geologic studies, the Khan Asparuh 1-21 Block, which spans nearly 15,000 square kilometers, may contain 500 billion cubic meters of natural gas.

Bulgarian Energy and Economy Minister Delyan Dobrev said he expects the natural-gas deposits to be no less than the accumulations found in the Romanian block earlier this year. OMV, which is exploring with a unit of Exxon Mobil Corporation (NYSE:XOM) (Houston, Texas), said in February it discovered what may be its biggest gas find in the Black Sea, estimated at as much as 84 billion cubic meters in accumulations.

Bulgaria imports all its gas from Russia, and is seeking to diversify supplies after they were cut for two weeks in 2009, following a price dispute between Ukraine and Russia. The Bulgarian government spends as much as $1.75 billion a year on gas imports.

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