Militants from the Islamic State of Iraq and the Levant are understood to have taken control of Iraq’s largest oil refinery.
An official from inside the facility in Baji said the fighters were in control of the “production units, administration building and four watch towers” which make up 75 percent of the site.
The attack began in the early hours of Wednesday morning with militants using mortars and machine guns. Foreign personnel had already left the site but local staff were understood to have stayed, with the military trying to protect the facility.
The government is fighting to push back the insurgents who overran Iraq’s second city Mosul last week.
Thousands of volunteers have joined remaining government forces who are holding off militants around 60 miles north of Baghdad.
Iraq’s Prime Minister Nouri al-Maliki has fired four top army generals who were in charge of operations in the north of Iraq, one of whom is accused of “fleeing the battle scene” when Mosul was captured last week.
Maliki has also accused Saudi Arabia, which is largely Sunni, of backing the insurgents.