Budapest  - Hungarian energy firm MOL said Wednesday it hoped a joint venture with ExxonMobil and the UK's Falcon Oil and Gas could lead to unconventional gas being extracted from Hungary's Mako trough between 2012 and 2014

"If the project is successful, the ratio of MOL's domestic gas production coming from unconventional sources would equal the amount of gas coming from conventional sources by 2015," MTI news agency quoted Attila Holoda, MOL's director for exploration and research in Eurasia, as saying.

MOL said Monday it had signed an agreement with ExxonMobil to jointly explore 1,560 kilometres of the Mako trough in south-east Hungary.

The company also said it had bought into another concession in the gas field, making it joint partners with ExxonMobil and Falcon Oil and Gas.

Exploratory drilling is expected to commence this year. However, the gas is deep below the surface and needs unconventional technologies to retrieve it.

MOL said it estimated its concessions held over 340 billion cubic metres of unconventional natural gas.

A 2006 study by the Dallas-based Scotia Group, commissioned by Falcon, said there was a 90-per-cent chance that the Mako trough could contain 18 trillion cubic feet of recoverable gas.

MOL said the gas field would need around 2,000 wells in total, with each well costing up to 12 million dollars. Unconventional wells are more expensive as they need to go up to twice as deep and produce less gas.

Some 50 unconventional wells can be drilled per year, although this needs an added infrastructural cost of up to 40 million dollars, MOL said.

Mol said it would cost 2 to 3 dollars per barrel to extract the gas and that it expected to recoup its costs within 3 years.

Hungary is currently reliant on Russian gas for about 80 per cent of its needs and is attempting to diversify its supply.

However, it caused a controversy recently when it signed up to the Russian South Stream gas pipeline, which is seen as a rival to the EU-backed Nabucco.

While Hungary has also said it supports Nabucco, which aims to reduce Europe's reliance on Russian gas, many analysts said its decision to sign up to South Stream was a blow to the EU-backed pipeline. (dpa)