Serbia’s NIS considering shale gas search in Hungary

15 June 2011 15:52  [Source: ICIS news]

(ICIS)--Serbian oil major Naftna Industrija Srbije (NIS) is investigating unconventional gas exploration in Hungary that may prepare its engineers for an attempt to find shale gas deposits in Serbia, the company said on Wednesday.

NIS, Canada’s Falcon Oil & Gas and the latter’s wholly-owned subsidiary TXM Oil and Gas Exploration have signed a letter of intent for the acquisition by NIS of an interest in drilling for gas in sandstone formations in the Algyo Play section of the Mako Trough, a basin in southeastern Hungary in which Falcon holds exploration rights.

If completed, the deal would entitle NIS to drill, test and complete three wells for unconventional gas thought to be 2.5-3.5km from the surface and allow it to keep 50% of earnings from any subsequent production, the three companies said in a joint press release.

“For our company, this is first of all about seeking for technology. Working closer with Falcon on this hydrocarbon system, we want to look at their ongoing unconventional activities,” said Denis Sugaipov, chief operating officer of NIS.

“Serbia has huge potential for shale gas exploration. Cooperation with Falcon in Hungary will allow us to learn and prepare our geologists and engineers for such a technology challenge. Working with different international companies abroad, we are going to find the right experienced, high-technology partner for further deep exploration in Serbia,” he added.

There have been various assessments of how much gas the Mako Trough might hold. One of the most optimistic, carried out by the Scotia Group in 2006, estimated that there may be 600bn cubic metres of extractable gas.

TXM received a production licence for the Algyo Play section in 2007, but has yet to extract any gas for commercial sale.

Poland has led the way in exploring for shale gas deposits that could be released by fracking technologies pioneered in the US.

By: Will Conroy
+44 20 8652 3214

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