Recent Study: Bulgaria Oil & Gas Report Q1 2014

The Bulgarian business environment remains challenging with ongoing conflicts between Lukoil and Customs authorities downstream and a moratorium on hydraulic fracturing upstream.

Bulgaria's oil sector is uninspiring with limited new activity and a continued decline in domestic production. Upside in Bulgaria's oil and gas sector comes from the US$1.2bn investment to upgrade the Neftochim refinery which will add a 50,000 barrel per day vacuum distillation unit, and from the natural gas sector which is looking increasingly positive. New gas projects being brought online both on and offshore will add to domestic output, as well as growing prospects from offshore seismic projects.

The main trends and developments in Bulgaria's oil and gas sector are:

* In September 2013, PetroCeltic successfully completed the tie-back of the Kaliakra-1 well to the Galata production platform. The addition of the Kaliakra tie-back will boost gas production to just over 500Mcm in 2013.
* In October 2013, TransAtlantic Petroleum spud the Deventci-R2 well in the Koynare concession. Sales of gas from the well are expected from 2014, with the wider area helping Bulgaria to continue year-on-year growth of domestic gas production through to 2016. Further 3D seismic to study structures of the Koynare fault trend is also due for 2014.
* The offshore East Kavarna field will be brought on stream in 2014, further adding to gas production growth. We anticipate production to reach 800Mcm by 2017.
* Further upside to Black Sea potential could be gained in the Khan-Asparuh block, to the South of Romania's successful Neptun block. In June 2013 OMV, Total and Repsol began the largest 3D seismic survey ever in the Black Sea.
* Despite growing interest in the Black Sea, it has not all been positive. The tender for the Teres block, located next to Khan-Asparuh, was cancelled after receiving no bids.
* One operational licence at Lukoil's Neftochim Burgas refinery was revoked by the Bulgarian customs authority. This was reportedly due to the company failing to install metering equipment by the March 2013 deadline, a prerequisite set out by the authority to combat smuggling and tax evasion.
* A new vacuum distillation unit with a capacity of 50,000 barrels per day (b/d) is in the process of being built by Technip. The new capacity is expected to be operational by 2015.
* Bulgaria's Risk/Reward Ratings remain unchanged as the upstream sector fails to lure major investment while its downstream remains in the hands of Lukoil. Bulgaria remains mid-table in our Central and Eastern Europe Oil & Gas RRRs.
* Progress on improving cross-border gas infrastructure trade flexibility continues as the development of interconnectors between Bulgaria and Romania, Serbia, Greece and Turkey reach different stages of completion.

Full Report Details at
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