BEIJING - China National Petroleum Corp (CNPC), China's top oil producer, said Monday operations have begun at the first phase of its Halfaya oil field project in Iraq, with an initial annual capacity of 5 million tons.

The company said the Halfaya oil field project is its largest overseas investment unit for which it also acts as the operator. It said the completion of the first phase of the project marked a milestone in its cooperative business in the Middle East.

Meanwhile, it has also started preliminary work on the construction of the second phase, which is set for an annual capacity of 10 million tons.

Located in the southeastern part of Iraq, the Halfaya oil field is one of the country's seven major oil fields. On January 27, 2010, CNPC's PetroChina and its partners Malaysia's Petronas and France's Total, signed a 20-year oil production agreement with Iraq's South Oil Company, which took effect on March 1, 2010.

CNPC is one of China's three oil giants and parent company of PetroChina Company Limited.