Hundreds of gunmen, including the militants linked to the Islamic State in Iraq and Levant (ISIL), an al Qaeda offshoot, waged an attack at dawn on the refinery compound in Baiji city from several directions with machine guns and mortar rounds, the source told Xinhua on condition of anonymity.
Fierce clashes between the attackers and security forces were under way. One mortar round hit a fuel storage and a large column of black smoke rose above the area, the source said.
Earlier, insurgent groups overran the city of Baiji, some 200 km north of Baghdad, as well as large parts of the predominantly Sunni province of Salahudin, including its capital Tikrit, some 170 km north of the Iraqi capital.
The deterioration in security situation in Iraq started last week when bloody clashes broke out between the Iraqi security forces and hundreds of Sunni militants, who took control of several neighbourhoods in the western part of Mosul and expanded later to other areas and provinces after the Iraqi security forces withdrew from the city.