Once again Bulgaria's government has announced a tender for offshore oil and gas exploration at Block 1-26 Khan Tervel. The site is located in the deep waters of the Bulgarian section of Black Sea and presumably has enough oil or gas reserves that could get extracted if the technology proves to be economically viable.
The decision signals that the current government sees mining opportunities in the Black Sea that can be beneficial for the country's economy. Also, it shows an official position towards mining - historically a divisive issue in Bulgaria. A month ago, the parliament tasked the energy minister with conducting negotiations for the inclusion of the state in the gas exploration project in the Khan Asparuh block, another oil and gas exploration site in the Black Sea. Local news outlets reported back then that Khan Asparuh could potentially deliver up to 13 billion cubic meters of natural gas per annum which is 4 times more than the country's annual consumption.
The tender for the Khan Tervel block is not the first one, but so far there has been no major interest towards that site. However, due to the war in Ukraine and the need for finding viable alternatives to Russian gas supplies, the outcome may be different this time around.
The conditions of the tender
Block 1-26 Khan Tervel has an area of 4032 sq. km and is located in Bulgaria's exclusive economic zone in the Black Sea. The prospecting and exploration permit will be granted for a period of 5 years, with the Law on Underground Resources providing for the possibility of extending it three times by two years each.
If the tender is successful, the winner is expected to conduct new 3D seismic surveys, prepare a geological model by defining the prospective drilling sites, assess oil potential and possibly drill an exploratory well. The deposit for participation in the contest is BGN 15,000 (€7,500).
Applicants must have a net sales revenue of at least €150 million in total over the past three years. They must also have software to analyze the seismic data, as well as experts to conduct the surveys.
On several occasions, companies have competed for Khan Tervel (formerly Teres) but without success. Limited exploration in the area was carried out between 2002 and 2007 by UK-based Vintage Petroleum. Subsequently, new tendering procedures were launched. In one of them no bids were lodged, while in the other several companies showed interest, but in the end none of them submitted documents. The difficult terrain was cited as the reason for their decisions.
Currently, offshore exploration in the Bulgarian waters of the Black Sea is only taking place in the Khan Asparuh block, which is located to the north of Khan Tervel. The process there is at a much more advanced stage, including drilling. The license holder is a consortium of giants TotalEnergies and OMV Petrom.Between the two blocks and to the west of Khan Tervel is Khan Kubrat (formerly Silistar), where unsuccessful attempts to seek hydrocarbons were also made. The first permit was given to the Bulgarian company Lederbel in 2011, but it was canceled by the Supreme Administrative Court as unlawfully issued. After a new competition, the exploration rights were granted to Shell, with Australia's Woodside and Spain's Repsol subsequently joining the project. However, the permit was valid until 2021 and is not currently on the energy ministry's register, meaning no extension has been requested.