Iraq's biggest oil refinery, Baiji, has been shut down and its foreign staff evacuated, refinery officials said on Tuesday, adding that local staff remain in place and the military is still in control of the facility.

Militants from al Qaeda splinter group Islamic State of Iraq and the Levant (ISIL) seized Iraq's second-biggest city of Mosul last week and other Sunni armed groups have advanced into the town of Baiji and surrounded its refinery.

The refinery shut down overnight, the sources said.

Baiji is one of three oil refineries in Iraq and only processes oil from the north. The other two are located in Baghdad and the south and are firmly under government control and operational.

"Due to the recent attacks of militants by mortars, the refinery administration decided to evacuate foreign workers for their safety and also to completely shut down production units to avoid extensive damage that could result," a chief engineer at the refinery said on condition of anonymity.

He said that there is sufficient gas oil, gasoline and kerosene to supply more than a month of domestic demand.