Offshore Oil & Gas Decommissioning - Bulgaria

There are two key regulators:

• The Minister of Energy - The Underground Resources Act (URA) provides that the Minister of Energy exercises overall control over:
  • conservation of the subsurface environment through the rational use of subsurface resources;
  • the content and implementation of both overall and annual detailed plans for prospecting, exploring for, extraction of, and primary processing of subsurface resources (including hydrocarbons); licenses and plans for mining waste management; and projects for conservation, completion and repurposing;
  • implementation of contracts for prospecting and exploring, or exploring, or the concession contracts (which permit extraction);
  • carrying out prospecting, exploration or extraction of subsurface resources:
    • without a license or concession granted;
    • with a license or with a concession, which has been suspended under the provisions of the URA, 1  or where the contract has concluded.
• The Minister of Environment and Waters - has control over the activities under licenses granted for prospecting and exploration, for exploration, and concessions granted for extraction, and over the operating and closure of mining waste facilities, including abandoned facilities, in connection with fulfilment of the conditions of decisions, licenses and opinions issued pursuant to the environmental protection legislation.

The main legislative act dealing with offshore oil and gas in Bulgaria is the URA, State Gazette Issue No. 23 dated 12 March 1999, as amended and supplemented from time to time.

The URA together with the concession agreement set the principles on the decommissioning process.

The URA provides that whoever does not fulfil the obligations of conservation of subsurface through the rational use of subsurface resources, or who carries out management actions for, including but not limited to, landfilling, processing, use, and disposal of the mining wastes without a license to do so, and/or a management plan, shall be penalised by a fine between BGN 10 000 and BGN 100 000 or by a penalty payment between BGN 50 000 and BGN 500 000.

Failure to comply with the terms and conditions of a license issued for management of mining waste and/or an approved management plan for mining waste, shall be penalised by a fine between BGN 1 000 and BGN 10 000 or by a penalty payment between BGN 5 000 and BGN 50 000.

For repeated violations, the fine or sanction can be tripled, unless a more severe sanction is imposed.

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This matter is usually regulated by the concession agreement and the way the concession is awarded to the concessionaires.

The applicable legislation does not make provisions regulating the relationship between the co-concessionaires.

In case of default of decommissioning obligations, the concedent is authorised to utilise the provided guarantee. If the guarantee is not sufficient to cover the remedial actions, the concedent has a court claim against the existing concessionaire(s) to the full amount of the damages caused.

As per the URA, prior to commencing activities under the permit operators should present financial guarantees to the Minister of Energy. The financial guarantee must cover the full amount of funds needed for:

• implementation of the operator’s obligations under the license and the mining waste management plan, including for recultivation of the land affected, and for the time after the closure of the facility, which obligations are not implemented at the time of providing the guarantee;
• implementation of the measures of the internal emergency plan in case of an accident occurrence of the mining waste facility.

The amount of the guarantee shall be determined according to the probable impact of the facility on the environment, the characteristics of the mining waste, and the future use of the recultivated land. The amount of the guarantee should be sufficient to cover the cost of the necessary repair works in case they need to be assigned by the Minister of Energy to a third party.

The amount of the guarantee shall be corrected periodically depending on the actions under the mining waste management plan, which remain to be fulfilled by the operator, as the change shall be subject to the acceptance of the implemented activities provided for in the plan.

The Minister of Energy shall release the financial guarantees upon closure of the facility and shall retain a part of it, sufficient to guarantee the obligations of the operator after closure of the facility for its maintenance, monitoring and control and, when necessary, for reclamation works as well in accordance with the management plan.

The funds of the provided financial guarantees cannot be subject to compulsory execution from third parties.

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