South Korea is to begin the first trial production run of its offshore Donghae-1 gas field next week with commercial production slated for 16 June.

The US$300 million Donghae-1 is the country's first ever natural gas field and is located in the Sea of Japan.

In a statement the Korea National Oil Co (KNOC) said, "KNOC will begin test production of 300-1,400 metric tons per day of gas, and will increase daily output to 1,650 metric tons per day in two years."

"The Donghae-1 gas field has around 50 billion cubic feet of gas and oil condensates," added the company.

The plan calls for the national oil company to pump 400,000 metric tons per annum of natural gas over the next 15 years. The gas will be transported to the industrial city of Ulsan and to neighbouring cities via pipelines managed by Korea Gas Corp (KOGAS).

Both firms have agreed to set the price of gas at a value lower than imported gas but were unable to comment further. An anonymous KNOC official did admit "the production cost is a little bit higher than that of larger gas fields, but we can reduce transportation costs and other expenditures; import tariff and tax".

The offshore gas field was discovered in 1998 and was initially slated to begin commercial production in November last year.

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