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 CNPC in southern Wasit province, Reuters reported.

"Today we started production with a capacity of 37,000 bpd and we will reach 60,000 bpd in the first half of August," 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