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Oil research and exploitation in BiH depends on the agreements between the two entities

Date: March 9^th 2010 Author: Mirsad Bajtarević, Sarajevo Category: Articles
Topic: Oil and oil derivates

Oil fields in Bosnia and Herzegovina are worth several tens of billions of US dollars according to some estimates, yet nobody will be able to exploit them unless the two entities – Republika Srpska and Federation BiH – reach an agreement, the local daily Nezavisne Novine reports, quoting entities’ concession commissions.

What revived the story on exploitation of oil – the existence of which was undoubtedly confirmed by recent exploration – was the visit of Prime Minister of Republika Srpska Milorad Dodik to Russia, during which it was announced that two Russian companies are to start exploring oil and gas fields in Republika Srpska (RS).

PHOTO: Petrom

Advisor to the RS Commission for Concession Ranko Cvijic said that during the 1989 explorations, they had selected four priority oil fields which were estimated to hold 50 million tons of oil. The first oil field is located south of the town of Samac, spreading across 22 square kilometres, the second site of an area of 37 square kilometres is located southwest of the town of Orasje, the third oil field in the Tuzla region stretches over 22.5 square kilometres and the fourth field is near Lopar, measuring 21 square kilometres.

On the world market and with current prices, the estimated volumes of oil reserves which amounted to some 50 million tons i.e. about 366 million barrels would cash in some 27 billion US dollars or about 38 billion convertible marks, Cvijic said.

The Tuzla oil field is located entirely within Federation BiH, while the one near Lopar is completely within the area of Republika Srpska. The other two fields stretch along the border between the two entities. In line with the General Framework Agreement for Peace in Bosnia and Herzegovina, which had been signed at Dayton, any concession agreements regarding exploration and exploitation of oil, gas as well as mineral sources on entities’ territories can only be signed by entity governments, Cvijic elaborated in Nezavisne Novine.

He further said that as far as oil was concerned, the situation was somewhat specific, as some of the sites were located on both sides of the border and it hardly paid off to work here unless the party exploiting oil had a concession for the entire volume of oil produced there.

Head of Concession Commission in Federation BiH Sefik Koricic said that it was still too soon to talk about granting concessions for oil exploration, as the Bosnian-Herzegovinian entity was about to adopt amendments to the Concession Act, with which the authority to grant the respective concessions would be given to the entity rather than to separate cantons as it had been practiced so far. Nevertheless, the decisions on concessions for exploiting oil fields that are located at the border between the entities would still remain with State Commission.

If someone decided to exploit oil, this would bring enormous benefits to the country, assuming that according to initial exploration the reserves would suffice for the next 50 years. In addition, gas could be produced next to oil so this would create additional income, Koricic elaborated.

According to Nezavisne Novine, the exploration has to be undertaken at a broader scale, as there are oil reserves also in the Dinaric Alps, which had been proved in the past by explorations of the US company AMOCO which is now defunct. At that point, the company in question claimed exploration rights for a period of 35 years.

Media further report that the concession for produced oil could amount to between 10 and 15 per cent of the total worth of oil.

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