By Slav Okov

(Bloomberg) — Royal Dutch Shell Plc signed a five-year contract for oil and pure fuel exploration within the deep waters of the Black Sea off the Bulgarian coast, which is able to allow the Balkan nation to cut back its reliance on Russian power imports.

Shell plans to take a position 18.6 million euros ($20.5 million) to discover fuel and oil deposits within the Silistar block, Energy Minister Temenuzhka Petkova informed reporters in Sofia Tuesday. The contract has an choice for 2 extensions by two years every, she stated.

“This process can be quite long and with much uncertainty,” Eileen Wilkinson, vp for Middle East and North Africa exploration at Shell International Exploration and Production BV, stated on the similar briefing. “Before we start exploration activities, we’ll receive all the regulatory and environmental approvals required.”

International explorers proceed to spend money on Black Sea drilling regardless of low oil costs and stress to chop exploration budgets as new deposit discoveries gasoline output forecasts, in response to a 2015 Wood Mackenzie report. Total SA, OMV AG and Repsol SA are joint-venture companions in one other Black Sea exploration block off the Bulgarian coast within the north, Khan Asparuh. The enterprise could begin exploration drilling in mid-2016, Petkova stated.

Bulgaria imports all its fuel from Russia and is looking for to diversify provides after they had been lower for 2 weeks in 2009 following a worth dispute between Ukraine and Russia. The European Union’s poorest state spends about $1 billion a yr on fuel imports.

©2016 Bloomberg News