"We still need to take a number of steps before starting production, but initial estimates show that the quantities are very good and more than enough for commercial exploitation," an INA official said. The official declined to give further details of the discovery.

The new gas fields are fully owned by INA Naftaplin, the gas unit of Croatia's largest company, which is working to assess the reserves of gas contained on the three drilling sites.

After the preliminary works, INA said it will conclude a commercial deal with the Syrian state-owned entity, State Petroleum Company, and plans production in 2005. "This certainly presents a great potential for us," the INA official said.

Famous for a spectacular coastline and producing world class sportspeople, Croatia declared its independence in 1991, which led to the bloody disintegration of the ex-Yugoslavia.

After recapturing conquered territory in 1995, the country has since struggled to reform its economy and raise living standards.