Iraq's southern oil export facilities, currently its only export outlet, were secure, with shipments now running at around 2.6 million barrels per day, Oil Minister Abdul Kareem Luaibi said on Wednesday.

An Al Qaeda splinter group seized control of the northern Iraqi city of Mosul on Tuesday, putting security forces to flight in a spectacular show of strength against the Shi'ite-led Baghdad government.

"All our exports now are from the Basra terminal in the south - and it's a very, very safe area," Luaibi told reporters ahead of an Opec meeting in Vienna. Iraq's northern export pipeline, which connects to a Turkish terminal, has been out of action since March after a bomb attack.

Luaibi also said there was better chance of agreement between the central government and the Kurdish region due to the situation in Mosul.

The comments came even as the militants advanced into the oil refinery town of Baiji, setting the court house and police station on fire, security sources said.

They said around 250 guards at the refinery had agreed to withdraw to another town after the militants sent a delegation of local tribal chiefs to persuade them to pull out.

Baiji resident Jasim al-Qaisi, said the militants also warned local police and soldiers not to challenge them.

"Yesterday at sunset some gunmen contacted the most prominent tribal sheikhs in Baiji via cellphone and told them: 'We are coming to die or control Baiji, so we advise you to ask your sons in the police and army to lay down their weapons and withdraw before (Tuesday) evening prayer'."

Militants entered Baiji later on Tuesday evening in around 60 vehicles, releasing prisoners in the town.

Baiji refinery is Iraq's biggest, supplying oil products to most of the country's provinces. A worker there said the morning shift had not been allowed to take over and the night shift was still working. - Reuters