Bulgaria Boosts Domestic Gas Production; Elevates Regional Role
Bulgarian domestic natural gas production has witnessed a significant increase according to announcements made by the Ministry of Energy. Production is expected to reach 490 million cubic metres (mcm) in 2012, compared to 440 mcm the year previous. Moreover, with the Devenci reserves now in production, estimates say it will top 580 mcm in 2013 and 660 mcm in 2014. It should be noted that Bulgaria's annual gas consumption is a bit over 3 billion cubic metres (bcm) and is exclusively met by imports from Gazprom, with which it has recently joined in the South Stream pipeline endeavor.
Plans to establish a new thermonuclear power station in Belene have effectively been frozen. As such, it appears the country will rely on natural gas consumption more in the future and it has been following a strategy both to secure reliable imports and at the same time expand its local production. It also follows a diversification policy, which is based on interconnectors with neighboring markets.
As a result of the above policies, the company Direct Petroleum Bulgaria EOOD will apply for a production concession. The Etropole concession is expected to cover an area of up to 1,640 square kilometers for a term of up to 35 years and there are positive estimations for production to be secured from there as well in the mid-term.
Furthermore, in August 2012 Sofia awarded a license for oil exploration in the Block 1-19 St. Athanasius. This is located south of the block where quantities sufficient for 10-15% of domestic gas consumption are currently being extracted. The company involved, Scotland’s Melrose Resources, merged with Irish Petroceltic International on October 10, 2012.
Lastly, Block 1-22 Teres, which is close to the maritime border with Turkey, is estimated to have significant amounts of natural gas. On 11th October 2012, the Bulgarian government announced it would call a public tender for interested companies wishing to explore the area.
Bulgaria has also upgraded its regional cooperation with Romania by recently inaugurating a 25km natural gas interconnector, commissioned by Bulgartransgaz EAD and Transgas SA. The total cost was around 24 million euros, of which 9 million euros was provided by EU structural funds, for the purposes of energy security and diversification of the Balkans - a catch-phrase for reducing local markets’ dependence on Gazprom.
Moreover, Bulgaria and Greece are boosting their interoperability on an energy level with the 170km-long IGB interconnector. Connecting the Thracian towns of Stara Zagora in Bulgaria with Komotini in Greece, the interconnector will be complete by the end of 2013 and will be fully operational in the beginning of the following year.
The total cost is estimated at 150 million euros, out of which 45 million euros will be awarded by the European Union. The EU strongly supports IGB as an implementation of the bloc’s natural gas diversification strategy in the Southeast European region.
The importance of the IGB lies mostly in the diversification policies as implemented by the EU, and this directly correlates with Azerbaijan’s final decision regarding which project will be selected for the Southern Gas Corridor. Should Nabucco West be selected, Bulgaria will seize the opportunity of using IGB as a route for exports to Greece. If TAP is selected, IGB will be used as a pipeline for imports to Bulgaria.
Bulgaria is also preparing to construct an interconnector with Serbia, which will have a capacity of 4.9 mcm/day, to be completed in 2015. Capacity may eventually increase to 13.6 mcm/day, according to technical studies conducted.
By combining policies of self-sufficiency and of gas sector diversification, Bulgaria has managed to attract as much benefits as possible, whilst participating in the South Stream project which apart from a steady flow of the commodity it may also provide substantial infrastructure investments. Overall, it should be expected that Bulgaria is moving well ahead into a natural gas driven economy with a variety of options to choose from.