New Market Research Report: Bulgaria Oil & Gas Report Q4 2012

New Energy market report from Business Monitor International: "Bulgaria Oil & Gas Report Q4 2012"

by Bill Thompson

(WireNews+Co) - Boston, MA - 27 October 2012

While peace may have broken out between local authorities and key refinery operator Lukoil, clearing the way for renewed downstream investment, Bulgaria's upstream prospects rest on early and significant success at Black Sea drilling operations.

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It had been thought that shale gas prospects could stimulate long-term supply, but the ban on fraccing means there is little chance of progress, frustrating IOC partners involved in early deals. Meanwhile, energy import dependency creeps steadily higher.

The main trends and developments we highlight for Bulgaria's Oil and Gas sector are:

- On January 18 2012, the Bulgarian Parliament enacted legislation to ban fracture stimulation (fraccing) following widespread protests against the controversial extraction procedure. It then suspended a shale gas exploration permit it had earlier granted to US-based oil major Chevron, in spite of the country's speculated 1,000bn cubic metres (bcm) of shale gas potential. In June 2012, the government partly lifted the moratorium, but only for conventional gas exploration.
- Bulgarian energy minister Delyan Dobrev announced in July 2012 that French oil major Total has been awarded the highly prospective Khan Asparuh block in the Black Sea. It beat rivals ExxonMobil and Melrose Resources to the offshore block, which preliminary studies show could hold up to 500bcm of gas. Total will partner Spain's Repsol and Austria's OMV to explore the block. Dobrev hopes that Khan Asparuh could yield an even larger discovery than the one made in Romania's Neptun block in the Black Sea earlier in February 2012 by ExxonMobil and Petrom.
- Bulgarian gas consumption is rising well ahead of domestic supply. Although gas output may reach 1.2bcm by 2014/15, net imports by 2016 could reach 2.3bcm, rising further to a possible 3.4bcm by 2021. In November 2009, Bulgaria and Azerbaijan signed a memorandum under which Bulgaria plans to import about 1bcm of natural gas from the Central Asian country from 2014.
- Oil demand growth, already modest before the current economic downturn, will make little progress until GDP growth accelerates, which suggests consumption may reach just 126,000 barrels per day (b/d) by 2016 and 137,000b/d by 2021. Imports are expected to grow in line with consumption, as exploration efforts by small independent oil companies are likely to deliver increased domestic crude volumes.
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