Despite widespread theft and bootlegging, legitimate oil production in war-ravaged Chechnya has reached 2,500 tons a day the director of the region's state-owned oil company said Sunday.

Grozneftegaz director Baudin Khamidov said Chechnya's oil industry has produced 355,000 tons of oil since the beginning of the year, earning the region 936 million rubles ($31.8 million), Itar-Tass reported. He said production was expected to rise to 3,500 tons a day by the end of the year.

Click here to read our special report on the Conflict in Chechnya.Ten years ago, Chechen refineries processed 5 million tons of oil extracted in the region, as well as 15 million tons from other regions, Itar-Tass said.

Amid the chaos of war between separatists and Russian forces, major refineries have been abandoned, while makeshift ones have sprung up to process oil stolen from pipelines or extracted from illegal wells.

Half of all Chechen families "make a living selling low-grade gasoline condensate on the side of the road," Khamidov said. Over the past six years, $1 billion worth of oil has been stolen or burnt in open wells, he added.