Bulgaria's Cabinet has formally decided to award a large-scale concession for shale gas exploration to US energy giant Chevron.

The decision was formalized by the Borisov government on Wednesday after at the end of May 2011 Bulgarian Economy, Energy, and Tourism Minister Traicho Traikov announced that US energy giant Chevron landed the shale gas exploration concession with a whopping offer of EUR 30 M, snatching it from British company BNK Petroleum, which remained second in the tender.

The exploration plot in question is near the town of Novi Pazar in Northeastern Bulgaria, and the Bulgarian government had set a minimum price of only EUR 200 000 for the five year.

Traikov himself has expressed his satisfaction that Chevron's EUR 30 M will be poured directly into Bulgaria's state budget.

According to the estimates of the bidders, the deposit near Novi Pazar contains between 300 billion and 1 trillion cubic meters of shale gas. In Traikov's words, Bulgaria's shale gas deposits should be able to guarantee its domestic consumption of natural gas for the next 1000 years.

Under Bulgarian government concession, Chevron is supposed to draft a working program for its exploration worth EUR 50 M, Bulgaria's Economy Minister announced on Wednesday after the Cabinet meeting.

In order to start the exploration of the shale gas deposits near Novi Pazar, Chevron will have to pay the Bulgarian state EUR 30 M, and all risks remain for the US corporation – including whether sufficient quantities of shale gas will be discovered or whether a potential extraction will received a positive environmental assessment, Traikov explained.

He has explicitly made clear his satisfaction with the tender for the Novi Pazar shale gas exploration concession stating that the selected investor is first-class, and that the tender itself was transparent.

Bidders can submit offers until the end of June 2011 for two other shale gas exploration tenders held by the Bulgarian government.

US company Chevron made clear its interest in Bulgaria's unexplored but potentially substantial shale gas deposit over the past two years. The perfecting of the technology for extraction from horizontal layers in the USA and Canada has allowed extraction in North America.