Australia's Key Petroleum eyes oil exploration in Bosnian region

Reuters - UK Focus

SARAJEVO, Dec 17 (Reuters) - Australia's Key Petroleum Ltd has expressed interest in oil and gas exploration in Bosnia after Shell Exploration Co, part of Royal Dutch Shell (Xetra: R6C1.DE - news) , pulled out, the Bosnian region's energy minister said on Thursday.

The minister, Nermin Dzindic, said a Key Petroleum delegation would visit Bosnia in January for talks on getting concessions for exploration and exploitation of oil and gas in the Bosniak-Croat Federation, one of Bosnia's two autonomous regions.

"After the meeting we will decide which direction we will take," Dzindic told Reuters.

Shell Exploration notified the government in September that it was pulling out of talks on a potential $700 million exploration deal in Bosnia, which began in 2011, due to a changed energy environment and following an internal global portfolio review.

The government has amended a law on oil and gas exploration and exploitation and decided to set up an expert panel to help it draft future contracts after a series of tenders seeking consultants to help it with the process of awarding a license failed to attract a favourable bid.

Experts say that deposits in Bosnia's southern oilfields, located at a depth of 4,000 to 8,000 metres, could contain up to 500 million tonnes of oil reserves, while deposits in its northern oilfields are estimated at 70 million tonnes.

Shell (LSE: RDSB.L - news) was the first oil producer to move towards exploration in the Bosniak-Croat region.

Before the 1992-95 Bosnian war, U.S (Other OTC: UBGXF - news) . and British researchers identified several potential oilfields in the Balkan (LSE: 0IS4.L - news) country.

In 2011, Bosnia's other autonomous region, the Serb Republic, awarded a concession for exploring potential oilfields to Jadran Naftagas, a joint venture between Russia's Neftegazinkor, a unit of state-owned Zarubezhneft, and Serbian oil firm NIS, majority-owned by Russia's Gazprom Neft. (Reporting by Maja Zuvela; Editing by Daria Sito-Sucic and Susan Fenton)