Bulgaria is reported to have granted a 10-year concession for the extraction of natural gas to UK company Melrose Resources. The move comes a week after the government and Melrose announced the discovery of new natural gas deposits in the Black Sea off the northern Bulgarian coast. Bulgaria’s Economy Minister Traicho Traikov said on Wednesday: “Since the price of this natural gas will be much cheaper than that of imported Russian gas, we expect a decline of natural gas prices in the country as a whole. ”He said the contract with Melrose allows the state to levy sanctions against the UK company if it fails to meet its concession obligations. Extraction is expected to start in three or four months time on the Kavarna deposit, which is estimated to have about 773 million cubic metres of gas and is located in the Black Sea shelf near the town of Kavarna, the Novinite website reported. Traikov said about 250-300 million cubic metres of natural gas will be extracted from the deposit annually - about 10 per cent of Bulgaria’s total consumption. The new deposit is located close to the Galata platform and adjacent gas processing facilities in the region of Varna built by Melrose Resources and, together with two other deposits nearby – Kaliakra and Kavarna East, has a total of three billion cubic metres of natural gas. Bulgaria’s Economy Ministry expects that, once the three are linked to the respective infrastructure, they can provide about 20 per cent of Bulgaria’s annual gas consumption over the next six years. During its Wednesday cabinet meeting, the Borisov Cabinet granted an oil and gas exploration permit to Oil and Gas Exploration and Production Plc, a company owned by the Bulgarian holding Chimimport. The permit relates to an area of 260 square km located between Pleven and Veliko Tarnovo in Central Northern Bulgaria.