The government has awarded British company Melrose Resources a 10-year concession for natural gas
extraction from the Kavarna field, the government information service said.

The company has held a licence for oil and gas prospecting and exploration in that area since December 2007.A contract is to be signed.

The company said that if the government's decision about the concession is positive, production can start within three or four months, Economy, Energy and Tourism Minister Traicho Traikov said.

The Kavarna field is located in the Black Sea continental shelf.It has an area of 4.36 square kilometres and the deposit is 773 million cubic metres. Production can start five weeks after a concession is awarded.

The area is close to the Galata platform and the adjoining gas processing installations near Varna, built by Melrose. The deposit is not large but is the company's third consecutive discovery in Bulgaria. The three deposits have a prospective reserve of over 3,000 million cubic metres of natural gas.

The Economy, Energy and Tourism Ministry expects that after those fields are linked with the existing infrastructure, they can meet 20 per cent of domestic requirements in the next six years.

Locally produced gas is expected to bring down the average price at which natural gas sells in Bulgaria.

A new licence for oil and gas prospecting and exploration was issued on Wednesday to Oil and Gas Exploration and Production AD. It will develop Block 1-17 Ovcha Mogila in the regions of Pleven and Veliko Turnovo, with an area of 260 square kilometres.