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By Hassan Hafidh Of DOW JONES NEWSWIRES BAGHDAD (Dow Jones)--Iraq is hoping to gain at least 150,000 barrels a day of new crude oil production at the end of this year or beginning of next year as mega-deals awarded from its first post-war licensing auction start to deliver, Iraqi and company officials say. Western oil companies are leading the drive toward ambitious production targets, though executives caution that lackluster security, inadequate infrastructure, poor transportation and bureaucratic difficulties are hindering longer-term efforts to rejuvenate the country's oil sector. Production capacity now stands at 2.4 million barrels a day, but should rise close to 2.6 million barrels a day by year's end if projects at three fields already producing deliver as promised. The giant southern fields of Rumaila, West Qunra Phase 1 and Zubair in southern Iraq, which are currently pumping around 1.5 million barrels a day, are expected to add at least an extra 10% of crude oil by year's end, the officials said. Rumaila, the backbone of Iraq's output, is the most advanced project, and BP PLC (BP) and China National Petroleum Corp. are expected to add more than 100,000 barrels a day by early next year if things proceed according to plan, Dhiaa Jaafar, head of Iraqi state-run South Oil Co., which overseas these fields, told Dow Jones Newswires by telephone from Basra. The field, which holds some 17 billion barrels proven reserves, is currently producing more than 1.1 million barrels a day. "Initial production of the field will go up by 10% at the beginning of 2011," Michael Townsend, president of BP Iraq, told an oil symposium held in Baghdad last week. New production from West Qurna Phase 1 in southern Iraq also is expected early next year. Exxon Mobil Corp. (XOM) along with Royal Dutch Shell PLC (RDSB), which won the deal last year, are gearing up to increase by 60,000 barrels a day. "We hope to raise production from the field to 250,000-260,000 barrels a day during the first quarter of next year," Exxon Vice President James Adams said. The field is currently producing 200,000 barrels a day, he said. Production from Zubair field is expected to increase by at least 70,000 barrels a day next year, officials said. A consortium led by Italy's Eni SpA (E) won the concession for the field. But Iraq may struggle to reach its full potential. Oil output from the semi-autonomous northern Kurdish region is on hold because of a dispute over payment between contractors and the central government in Baghdad. If that row solved it means the region could contribute between 70,000 and 100,000 barrels a day late this or early next year. And this year's production targets are just the start of an aggressive oil expansion that will ultimately lift the combined output from the three southern fields alone beyond 6 million barrels a day--provided official targets are hit. Eight more deals awarded in Iraq's second oil licensing auction held in December last year for largely untapped fields could, in theory, add a further 6 million barrels a day--taking overall capacity to 12 million barrels a day. "You need to prove to the whole world that your are able and committed to implement these deals," oil minister Hussein al-Shahristani told the symposium last week. Some observers, however, believe that Iraq's official oil production forecast is unrealistic. They think it would be realistic for Iraq to achieve the level of production of six to seven million barrels a day by 2020, if the Organization of Petroleum Exporting Countries, OPEC, continues to sustain its current oil pricing policy. One expert said that if Iraq has the proper infrastructure it would achieve the 12 million barrels a day target, but it doesn't. At a two-day symposium held in Baghdad last week, executives from 16 firms that signed deals to develop the country's oil industry said security concerns, inadequate infrastructure, visa- and customs-procedures delays, poor transportation, and the absence of clear communications and coordination among the many Iraqi government entities could make the 12 million figure unattainable. -By Hassan Hafidh; Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com (END) Dow Jones Newswires July 26, 2010 09:19 ET (13:19 GMT)