"We've decided to start our first drilling for shale gas or shale oil. Let's see what's underground," Lotos' president Pawel Olechnowicz told journalists in the Lithuanian capital Vilnius.

"This year we think that we will make first tests," Olechnowicz said after meeting with Prime Minister Andrius Kubilius.

Kubilius' chief of staff Deividas Matulionis said that Lotos, which controls the Lithuanian oil company Lotos Geonafta, would carry out the first tests in fields that are already at its disposal."We can only welcome such an initiative," he added.

Matulionis said the Polish company also planned to take part in an upcoming tender for other fields close to Lithuania's borders with Poland and Russia's Kaliningrad territory.

Experts say Lithuania may have sufficient reserves of gas trapped in shale - sedimentary rock containing hydrocarbons - to cover its needs for between 30 to 50 years.

Though generally more expensive to extract than conventional natural gas, it is seen as a way to cut dependence on imports.

The Russian energy giant Gazprom is Lithuania's only natural gas supplier at present.

The Baltic nation of three million is also seeking to break Gazprom's monopoly via a liquefied natural gas terminal which is expected to start operations by the end of 2014.

Lithuania's relations with Russia have remained rocky since Vilnius won its independence from the Kremlin as the Soviet Union unravelled in 1991, and notably since Lithuania joined the European Union and NATO in 2004.

Lotos is the second biggest oil company in Poland, which has also issued scores of shale gas permits to firms including Chevron, Exxon Mobil and ConocoPhillips and aims to begin commercial shale gas production by 2014.

Little known even five years ago, shale gas is seen as having the potential to change global energy markets.

But moves to tap it have sown deep divisions in Europe amid concerns that the hydraulic fracturing used in its extraction is environmentally risky.

AFP