An agreement for the participation of the state, through Bulgarian Energy Holding (BEH) EAD, in the exploration for oil and natural gas in the Khan Asparuh block in the Black Sea was signed today at the Council of Ministers, in the presence of the outgoing Prime Minister Rosen Zhelyazkov and the outgoing Minister of Energy Zhecho Stankov, on January 21.
Under the agreement, concluded between BEH, OMV Offshore Bulgaria and NewMed Energy Balkan Limited, BEH will acquire a 10% stake in the rights to explore for oil and natural gas in Block 1-21 Khan Asparuh, located in Bulgaria’s exclusive economic zone in the Black Sea.
At the signing ceremony, outgoing Minister Stankov said this would give Bulgaria, for the first time in its modern history, the opportunity for a Bulgarian company to take an active part in activities related to the search and exploration for oil and gas on national territory. He explained that, in addition to a concession fee of up to 30% which the state would be entitled to receive in the event of a discovery in the deep Black Sea, BEH would also be able, through its 10% investment, to generate its own revenues from this strategic project.
“I have always maintained that the cheapest gas is our own gas – Bulgarian gas. That is why BEH’s entry into this consortium at this moment is extremely strategic. We are talking about investments in the next two drilling operations,” Stankov said. He added that these investments offer prospects for security of supply, energy independence and additional budget revenues which, through fair distribution, would benefit all Bulgarian citizens.
He described the agreement as the result of a long process over the past nine months, carried out jointly with partners from OMV, NewMed and BEH. “At times the discussions were very constructive, at others we reached disagreements, but the outcome was successful,” he said, adding that thanks to the Prime Minister the strategic decision-making process had been accelerated so that all key documents could be signed within days.
Stankov also expressed confidence that, given the fact that discoveries have already been made just a few kilometres from Bulgaria’s border in Turkey and Romania, capable of covering national consumption for between 20 and 30 years, it was only a matter of time before a similar success would be achieved on Bulgarian territory.
“For us, this participation represents a new interpretation of the state’s investment potential and intentions as an active participant in economic processes – as an investor,” said outgoing Prime Minister Rosen Zhelyazkov. “We are entering this process because we understand the investment role of the state and the potential it has, through its structures and commercial entities, to take an active part in activities that can generate significant added value.”
He said the state was joining the search and exploration for underground resources as an investor, with the aim of developing the extractive industry and unlocking a competitive potential that had existed but had not been used effectively until now. Zhelyazkov thanked OMV and NewMed for treating the state as an equal commercial partner and expressed confidence that the prospect of meeting Bulgaria’s energy needs from domestic production would contribute to far greater energy and resource independence.
Executive Director of BEH Valentin Nikolov noted the symbolic nature of the date. “Today is the 21st of January, in Khan Asparuh, in Block 21, and we are expecting good news,” he said. He described the agreement as a “win-win” arrangement: investors gain confidence when a state-owned company is involved, while BEH gains experience and the opportunity to develop a new strategic area in Bulgaria. “We hope to build a new structure within BEH for the exploration of strategic resources, which will strengthen our independence,” he added, noting the symbolism of Khan Asparuh as the founder of the Bulgarian state and expressing hope that “we will discover something beneath this land as well”.
Christina Verchere, Chief Executive Officer of OMV Petrom, described the partnership as fundamental. “We are a significant investor in the Black Sea and we are pleased to see what opportunities may open up for Bulgaria and how this can become a real pillar of the economy,” she said. “It is a great honour for us that BEH is joining us together with NewMed, and we look forward to a long-term partnership as we continue to search for natural gas in Bulgaria.”
Joseph Abu, Director of NewMed Energy Balkan Limited, said: “Today we are celebrating a great and important opportunity from which everyone can benefit – Bulgarian citizens, and us as partners who have the chance to come here and invest.” He added that this new investment could create a new pillar for the development of the Bulgarian economy. “What we see is only the beginning. Once we start our work and make a discovery, I believe the results will be even greater and the opportunities for long-term investment in the country will grow significantly. This will be good for investors, for Bulgaria, and for Bulgarian citizens.”
Referring to Khan Asparuh, the founder of the Bulgarian state, Abu said he hoped that the Khan Asparuh block would now contribute to establishing the independence of Bulgaria’s energy market.
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