Mosul car
Children stand next to a burnt-out vehicle during clashes between Iraqi security forces and al Qaida-linked Islamic State in Iraq and the Levant (ISIL) in the northern Iraq city of Mosul Reuters

Militants from the al Qaida offshoot who seized Iraq's second largest city of Mosul have advanced into the oil refinery town of Baiji.

Located close to Mosul in the north of the country, the town is home to Iraq's largest refinery protected by around 250 guards.

According to Reuters sources, militants from the Islamic State of Iraq and the Levant (ISIS) sent a group of tribal sheikhs to negotiate with the guards, who said they would withdraw if they were given safe passage to another town.

The Baiji refinery can process up to 300,000 barrels of oil per day and is a major power source for the capital Baghdad.

Iraq's Oil Minister Abdul Kareem Luaibi has said export facilities in the country are secure, with shipments running around 2.6m barrels per day.

"All our exports are now from the Basra terminal in the south – and it's a very, very safe area." Luaibi told reporters.

Isis have just seized control of Iraq's second city, after the national army and security forces withdrew. Iraq's prime minister has asked parliament to declare a state of emergency across the whole country.

According to the International Organisation for Migration, around 500,000 Iraqis fled the violence in Mosul, which lies around 225 miles northwest of the capital Baghdad.