Iraq has made headway in talks with 17 international firms to construct refineries to meet shortage of oil products for local use, a source at the oil ministry said.

The refineries, to be constructed in Baghdad, Mosul and Basra, will have capacities ranging between 250,000-300,000 barrels a day, said the source, who asked for anonymity.

He added that the ministry has plans to build mobile refineries with 10,000 b/d capacity to be increased later to 30,000 b/d in Arbil, Sulaimania, Amara, Haditha, Nassiriya and Diwaniya.

He said existing refineries at Baiji and Dora in Baghdad and one in Basra were unable to meet the increasing demand for derivatives.

The ministry official also said the Iraqi government intends to adopt a coupon system for sale of petrol and oil-based household fuel.

For the second week running, long queues of motorists have formed at petrol stations.

The ministry said demand for fuel has grown because of electricity cuts, which have prompted people to turn to generators powered by oil-based fuel.

Iraq currently imports an estimated 200 million dollars worth of fuel from its neighbours each month.