Bulgaria’s shale gas reserves could play an important role for the country’s energy independence. Currently Bulgaria has a moratorium on hydraulic fracturing, effectively blocking shale gas exploration and extraction.

Size of the opportunity

So far, there have been no official national studies to determine the level of shale gas resources in Bulgaria, although US energy company Direct Petroleum announced it had discovered 6 billion cubic metres at Deventci and 300 billion cubic metres near Etropole. The US Energy Information Administration has estimated that Bulgaria may host  481 billion cubic metres (17 trillion cubic feet) of shale gas.  However, until the moratorium is lifted and exploratory drilling allowed to commence, this figure cannot be confirmed.

Impact on energy security

Gas accounts for 12% of Bulgaria’s gross inland energy consumption according to Eurostat data from 2009. The country produces a small amount of natural gas domestically but although its use of natural gas is low compared to other countries in Europe, it nonetheless depends on one single source, Russia – to cover the majority of its natural gas needs.

Impact on the economy

Despite persistent protests by members of the public over rising energy prices that brought down the government last year, to date little attention has been paid internally to the alleviating effects of shale gas on domestic energy costs.

The moratorium has also impacted foreign investment. US energy company Chevron had been given a permit to prospect for shale gas in Bulgaria and planned to start production in northeastern Bulgaria. However, the licence was revoked when the moratorium was introduced.

The Institute for Market Economics in Bulgaria released a report in March 2014 estimating the social and economic impacts of shale gas development according to several different scenarios. According to the report, shale gas development could create 25,000 jobs in Bulgaria given a more conservative scenario, or as many as 39,000 if full potential is realised. It also states that shale gas production in Bulgaria could accelerate the annual average economic growth rate by 0.6% or EUR 238.4 million per year and potentially increase GDP by 20% in the long term. The report concludes that Bulgaria imports 90% of its gas, and indigenous reserves are depleting, so development of its own shale gas reserves could reduce long-term import dependency.

Government policy

The previous Bulgarian government imposed a moratorium on hydraulic fracturing in January 2012 due to pressure from environmental groups. Since then, the new Government of Prime Minister Palmen Oresharski has maintained the moratorium, yet in the first days of the government’s mandate he also noted that “life is dynamic”, and that priorities can change.

In June 2013, Environment Minister Iskra Mihaylova announced that she believes that the moratorium is only a temporary measure and that further analyses can show where it is safe to explore for shale gas. She noted that lack of trust is one of the biggest challenges, since the electorate believes that public institutions do not defend the interests of the citizens. Yet after protests of environmentalists concerned about underground water pollution, she confirmed that the moratorium will be maintained.

The position of the ruling coalition has deteriorated following European Parliament elections and the unfolding controversy over the South Stream gas pipeline. Elections could be held in late 2014, and this could see a shift of power towards the pro-shale gas GERB conservative party and consequently a change in Bulgaria’s energy agenda. A shift of power towards the pro-shale gas GERB conservative party would likely cause a change in Bulgaria’s energy agenda, as they are keen on becoming independent from Russia