Iraq started production on Saturday in the first phase of its CNPC-operated Al Ahdab oilfield at 37,000 barrels per day (bpd), the country's oil minister said.

Al Ahdab was the first major oilfield development contract awarded by the Iraqi government after the 2003 US-led invasion, reviving a Saddam Hussein-era deal with China National Petroleum Corp (CNPC) in southern Wasit province.

'Today we started production with a capacity of 37,000 bpd and we will reach 60,000 bpd in the first half of August,' Abdul-Kareem Luaibi said at a launch ceremony.

Luaibi said the second phase of Al Ahdab would start in December and would take the field's output capacity to 120,000 bpd, while the third would start at the end of 2012 and increase expected capacity to 160,000 bpd.

State-owned CNPC operates in more than 80 oil and gas projects in nearly 30 countries. It completed construction of the first phase of the Al Ahdab oilfield on June 21 and is also developing Iraq's Rumaila oilfield with BP and Halfaya oilfield with France's Total and Malaysia's Petronas.

Deputy Prime Minister Hussain al-Shahristani said Iraq was studying a proposal from CNPC to production at al-Ahdab to 200,000 bpd.

'We will base our response to this proposal ...on the needs of Iraq and the global markets,' Shahristani told reporters at the field.

Luaibi said a recent exploratory survey showed Al Ahdab had reserves of three billion barrels and revenue from the field was expected to be more than $40 billion during the next 20 years.

Iraq, which relies on oil for 95 per cent of its revenues, has signed a series of oil contracts with international companies to try to boost output capacity to 12 million bpd by 2017 from around 2.7 million bpd currently. – Reuters