Carlos Salinas, the head of state oil company YPFB, told local news agency Jatha that initial tests by the South Korean company had proven positive.

"We have an excellent indicator. We are waiting for the complementary work to make final evaluations of the potential," Salinas said.

Without citing their sources, local media reported that Dong Won had found a gas reserve of at least 1.5 trillion cubic feet, amounting to roughly 20 per cent of Bolivia's total proven gas reserves.

The find was made in the El Palmar field not far from the city of Santa Cruz.

More than a dozen foreign oil firms are exploring for gas in Bolivia, in the hope of exporting to the huge neighbouring Brazilian market.

A month ago, Brazilian state oil company Petrobras found a gas reserve of atleast one trillion cubic feet in the South near the border with Argentina. Exploitation of the field will start in 2000.