ANTANANARIVO, March 14, 2008 (AFP) - A private company in Madagascar said Friday that it had produced the impoverished Indian Ocean island's first barrels of oil at an onshore pilot-project.

In a joint statement, the Office of National Mines and and Strategic Industries (OMNIS) and the Houston-based Madagascar Oil company announced 'the first oil production from the steam injunction pilot project at the Tsimororo heavy oil field.'

The current net output stands at a modest 45 barrels per day. The potential production is estimated at 1,000 barrels.

The oil field is located south of Mahajanga, 560 kilometres (350 miles) west of the capital Antananarivo.

Madagascar is one of the world's poorest countries and its first production of oil comes as world oil prices keep smashing new record highs.

OMNIS has issued 19 permits for onshore exploration and 25 for offshore exploration.