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Bosnia region, Shell in oil exploration deal

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Bosnia’s Muslim-Croat federation will seal a preliminary deal next month with Shell Exploration Company, part of Royal Dutch Shell , to start exploring potential natural gas and oil fields in the region, the government said on Thursday.

Energy Minister Erdal Trhulj said the government approached the oil major in May, after deciding to revive oil and gas exploration plans first made before Bosnia’s 1992-95 war, when U.S. and British researchers found deposits in the north and south.

“We have finally reached a point where both sides agree to sign a two-year memorandum with a possibility of a one-year extension in early November,” Trhulj told reporters.

Under the deal, Bosnia’s largest engineering group Energoinvest, which was the local partner in the original project, will hand over all documentation to Shell.

In the first phase, Shell will conduct digital screening of the territory in question, followed by geophysical and seismic research, said Trhulj.

“After an estimated two-year period, we should have a clear indication about the potential oil and gas reserves,” he added.

Trhulj said the federation parliament would then decide whether to call an international exploration tender or to award exclusive exploration rights to a future partner.

“If the research proves promising, I hope that first exploitation could start in January 2015,” he said.

The Serb Republic, Bosnia’s other autonomous region, awarded a concession in July to Jadran Naftagas, a joint venture of Russia’s Neftegazinkor, a unit of state-owned Zarubezhneft, and Serbian oil firm NIS, to start exploring potential oilfields there.

In a separate statement on Thursday, Jadran Naftagas said it was starting geophysical and seismic research in an area of the Serb Republic. It said it planned to invest $41 million in the first exploration phase.

Bosnian geologists say oil and gas reserves are uncertain. Some see oil deposits in the north at 20 million tonnes in the federation to 50 million tonnes in the Serb Republic, but many deposits are spread between the two regions.

More oil, possibly 500 million tonnes, is believed to exist in the southern deposits at a depth of 5,000-6,000 metres.




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