PetroChina Co. Ltd. (PTR, 0857.HK, 601857.SH, K3OD.SG) and its partners Total SA (TOT, FP.FR) and Petronas Calgari, said Wednesday oil production has commenced at the Halfaya oil field in southern Iraq.

Iraq Deputy Prime Minister Hussein al-Shahristani said the consortium has started production of 100,000 barrels a day from the field, with some 16 billion barrels of oil in place.

PetroChina, a subsidiary of China National Petroleum Corp., or CNPC, China's largest energy producer, holds 37.5% of the consortium. Total and Petronas Calgari each hold a 18.75% stake in the consortium, while Iraq's state partner holds the remaining 25%.

In late 2009, the PetroChina-led group won the right to develop the oil field some 35 kilometers south of the city of Amarah in southern Iraq.

The second phase of Halfaya will involve production capacity reaching 200,000 barrels a day by the end of 2013, while the third phase will have the field pumping a total of 400,000 barrels a day by the end of 2014, Iraq's oil minister, Abdul Kareem Luaiby, said. The consortium is planning to hit production of 600,000 barrels a day by the end of 2016, he added.

Mr. Shahristani said Iraq's total output has reached around 3.1 million barrels a day, up from three million barrels a day last month.

Iraq, a member of the Organization of Petroleum Exporting Countries, holds the world's third-largest oil reserves and has become the second-largest oil exporter in OPEC after Iran, whose output is retreating following sanctions imposed by the European Union against Iran's oil exports.

So far, PetroChina has invested some $700 million in Halfaya and the investment is expected to reach $1 billion by the end of this year, said Adnan Sajet, head of the joint-management committee of the field.

Some 22 new wells have been drilled in the field. Five wells existed before PetroChina started work on the project.

Six rigs are in operation in the field, Mr. Sajet said. The consortium is employing 2,000 Iraqis, he added.

CNPC and its subsidiary PetroChina are developing two more Iraqi fields. Along with BP PLC (BP, BP.LN), CNPC is developing Iraq's largest oil field, Rumaila, in southern Basra province, where production is hitting 1.35 million barrels a day.

The firm is also developing Ahdab oil field in Wasit province in central Iraq. The field recently started pumping 140,000 barrels a day.

CNPC has invested $3.3 billion in developing oil projects in Iraq so far, the company's vice president, Wang Dongjin, said.

Missan oil fields--Halfaya, Buzurkan, Fuka and Abu Ghareb--are producing nearly 200,000 barrels a day, generating some $200 million a day for Iraq, Mr. Shahristani said.

Production from Missan oil fields is expected to hit one million barrels a day in the next few years, Mr. Shahristani added.