Islamist insurgents battled Iraqi forces for control of the nation’s largest oil refinery. Local police said militants are inside the plant, while the central government said its elite troops are in control.

Army helicopters struck fighters from the Islamic State in Iraq and the Levant near Baiji after militants seized the 310,000-bpd refinery, according to a statement from the Salahudin provincial police. ISIL fighters are still inside the facility and the battle continues, it said.

Iraq’s troops killed 40 militants and repelled their attack, military spokesman Qassim Ata said in a televised news conference.

Baiji has about 40% of Iraq’s refining capacity, according to data compiled by Bloomberg. The refinery, about 120 miles (190 kilometers) north of Baghdad, mainly supplies the north of the country and its capital, according to Robin Mills, head of consulting at Manaar Energy Consulting and Project Management. 

“Iraq will have to increase the import of oil products to make up for the loss of Baiji’s production,” he said.

The rapid battlefield success of ISIL, a Sunni Muslim al-Qaeda breakaway group also embroiled in battles in neighboring Syria, threatens to re-ignite a sectarian civil war in Iraq, three years after the withdrawal of US forces. It also risks escalating into a wider conflict that draws in the US and Iran in defense of Prime Minister Nouri al-Maliki’s Shiite-led government. 

Iraq is the largest oil producer, after Saudi Arabia, in the Organization of Petroleum Exporting Countries.

Anti-terrorism forces killed a Saudi fighter identified as Abu Yamama al-Dossary during the “failed attack” on the Baiji refinery, state-sponsored Iraqiya television reported. A fuel tank at the plant caught fire during the clashes. 

The refinery has halted operations since June 15, the police said.

While violence sweeps much of northern Iraq, the conflict has so far spared crude production in the country’s south. The northern Kirkuk oilfield is being defended by troops from the self-governing Kurdish region.

Iraq, excluding its Kurdish enclave, holds 150 billion bbl in proven crude reserves, the world’s fifth-biggest deposits. The Kurdistan Regional Government controls 45 billion bbl.