By Slav Okov
(Bloomberg) — Royal Dutch Shell Plc signed a five-year contract for oil and natural gas exploration in the deep waters of the Black Sea off the Bulgarian coast, which will enable the Balkan nation to reduce its reliance on Russian energy imports.
Shell plans to invest 18.6 million euros ($20.5 million) to explore gas and oil deposits in the Silistar block, Energy Minister Temenuzhka Petkova told reporters in Sofia Tuesday. The contract has an option for two extensions by two years each, she said.
“This process can be quite long and with much uncertainty,” Eileen Wilkinson, vice president for Middle East and North Africa exploration at Shell International Exploration and Production BV, said at the same briefing. “Before we start exploration activities, we’ll receive all the regulatory and environmental approvals required.”
International explorers continue to invest in Black Sea drilling despite low oil prices and pressure to cut exploration budgets as new deposit discoveries fuel output forecasts, according to a 2015 Wood Mackenzie report. Total SA, OMV AG and Repsol SA are joint-venture partners in another Black Sea exploration block off the Bulgarian coast in the north, Khan Asparuh. The venture may start exploration drilling in mid-2016, Petkova said.
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 European Union’s poorest state spends about $1 billion a year on gas imports.
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