Donghae-1 Gas Field Starts Commercial Operation
- KNOC to supply LNG to South Gyeongsang Province for 15 years, making Korea an OPEC country

Donghae-1 under sea gas field located southeast of Ulchin went into commercial operation Nov.5 following its discovery in 1998. A ceremony marking the commercial operation took place at the oil refining base of the Korea National Oil Corp. in Ulsan with a host of dignitaries both foreign and domestic attending led by Prime Minister Lee Hae-chan.
The feat came after 40 years of Korea's search for oil and natural gas fields in its offshore coastal seas, which started in 1964. It made Korea the 95th oil producing country in the world using only domestic capital and technology, Korea National Oil Corp.(President Yi Ok-su) said. The event has attracted a special attention in the country due to the high oil prices and as a hopeful sign that the country would be able to meet its large energy needs with its own energy resources.
The production base for Donghae-1 gas field is located some 58 km to southeast of Ulsan inside the exclusive economic zone with the depth of the sea around 150 meters. The gas is being pumped up from 2,700 to 3,000 meters deep in the sea bed. Gas condensates are separated in the first production phase, which was built by Hyundai Heavy Industries and Samsung Engineering on turnkey basis starting from July, 2001. The platform is 93 meters high and 50 meters wide with a total space of 380 pyeong.
The pumped up gas is sent to a terminal in Ulsan through pipelines stretching for 68 km, where the gas goes through the second production process with a daily production of 1,000 tons of LNG and 110 tons of condensates. The gas is supplied to homes in the region, while gas condensates are being sent to the S-Oil refinery in Onsan.
Korea National Oil Corp. first discovered the gas field in July, 1998 and it took a year to find out that the gas field was commercially feasible. KNOC estimates that the gas field contains 5 million tons of natural gas, enough to supply LNG to homes in Ulsan and South Gyeongsang Province for 15 years. The oil company plans to supply 400,000 tons of LNG and supply it to the region. The volume is equal to the amount of LNG that 340,000 homes consume a year and 2.2 percent of total LNG consumed in the country a year. KNOC projects the profit from the operation would amount to around $350 million subtracting the cost of development amounting to $1.36 billion from total sales revenue of $1.71 billion. The amount of replacement of imported LNG would be around $1.2 billion.
Korea Institute of Economy and Trade projects total production value from the gas field would be around 4,033.8 billion won with value-added creation amounting to 1,895.1 billion won and creating 34,000 jobs.
In addition, it showed to the world that Korea can explore oil and gas with its own technology and capital, strengthening its hands in participating in overseas oil exploration projects. Especially, KNOC succeeded where oil majors failed to find oil and gas on Korea's continental shelves and took care of the full range of processes with its own technology and funds, boosting Korea's standing in the overseas resources development area. With the sign that Korea's continental shelves contain oil through the discovery of Donghae-1 gas field, foreign capital found solid reasons to back up oil exploration projects in the country's continental shelves. Korea has a total continental shelves of 300,000 square km accessible for oil exploration, attracting the attention of neighboring China and Japan.
Yi Ok-su, KNOC president, said Donghae-1 gas field is a feat that put Korea on the map of oil producing countries in the world, adding that the company will focus on overseas oil exploration projects to be able to meet 10 percent of the country's oil needs. nw