Russian, Serbian firms to explore Bosnia oilfields

BANJA LUKA, Bosnia, July 16 (Reuters) - Russian state company Zarubezhneft and Serbian oil monopoly NIS, majority owned by Russia's Gazprom Neft (SIBN.MM), agreed on Friday to jointly explore oilfields in northern Bosnia.

The two companies signed a memorandum to form a joint venture that will explore oilfields in the Serb Republic but expressed interest to expand also in Bosnia's other region, the Muslim-Croat federation.

"The exploration of oilfields is a very important project of regional importance and Serbia expects other countries of the region to join," said Serbian Energy Minister Petar Skundric, adding that Serbia has already talked to Albania about it.

The research conducted by U.S. and British consultants before the break-up of Yugoslavia in the 1990s showed oil in the north and south of Bosnia but the 1992-95 war stopped the project in its tracks.

Bosnian geologists are not certain about quantities. Some say that oil deposits in the north of the country range from 20 million tonnes in the federation to 50 million tonnes in the Serb Republic, but many oil beds spread between the two regions.

More oil, possibly 500 million tonnes, is believed to exist in the southern deposits but they were hard to assess at 5,000-6,000 metres depth.

Zarubezhneft was given the rights for oil exploration in the Serb Republic when it acquired Bosnia's sole oil refinery, Brod, in 2007. A new company that will be formed along with NIS should start exploration in 2011, officials said.

If the research proves positive, they will apply for concessions for the drilling which could start in 2014 and reach the maximum annual output of one million tonne by 2020, said NIS Director Kiril Kravchenko.

The preliminary research will cost around $20 million while the whole project is estimated at more than $150 million, said Serb Republic Prime Minister Milorad Dodik. He said his government would quickly grant concessions for the drilling if required.

The Muslim-Croat federation authorised the engineering group Energoinvest to lead the exploration in the region with interested strategic partners but the process had stalled due to an unfavourable concession law. (Reporting by Olja Stanic, writing by Daria Sito-Sucic; Editing by William Hardy)