SARAJEVO, Sept 30 (Reuters) - Shell Exploration Co, part ofoil major Royal Dutch Shell, is pulling out of oilexploration in Bosnia worth up to $700 million, citing a changedenergy environment, a letter from the company and seen byReuters showed on Wednesday.
In 2011, Shell and the government of Bosnia's autonomousBosniak-Croat Federation signed a memorandum of understanding (MOU) aimed at reaching a deal on a petroleum license.
The memorandum was extended in 2013 and 2014 to enable theparties potentially to negotiate the license but "suchnegotiations have not started and the MOU expires on Nov. 4",Shell said in a notice to the government.
Shell said it would not seek to extend the deal further"following an internal portfolio review and in the light of thecurrent oil and gas environment".
Earlier this week, Shell abandoned its Arctic search for oilafter failing to find enough crude.
Its investment in Bosnia was due to range between $300million and $700 million, depending on the number of drillingsites, the government had said earlier. Company spokeswomanJeanette Hamster declined to provide additional comment.
Stipo Buljan, secretary at the federation's energy ministry,said the government would debate Shell's letter.
The ministry had called a series of tenders seekingconsultants to help it with the process of awarding a license toShell but failed to attract a favourable bid.
It had agreed on a preliminary basis to award Shell aconcession in the Dinaridi area, stretching from the town ofBihac in the west to the Adriatic town of Neum in the south.
Experts say that southern deposits, located at a depth of4,000 to 8,000 metres, could contain up to 500 million tonnes ofoil reserves, while northern deposits are estimated at 70million tonnes.
Shell said its decision was based on a global portfolioreview and not on the potential of the area.
Before the 1992-95 Bosnian war, U.S. and British researchersidentified several potential oilfields in the Balkan country. (Reporting by Maja Zuvela; Editing by Daria Sito-Sucic and DaleHudson)
