Iraqi oil minister Hussein al-Shahristani has called on Iran to assist in the construction of five new refineries in the country, including one in the holy city of Karbala, a senior Iranian official has announced.

Fars News Agency reports that Nureddin Shahnazizadeh, managing director of the National Iranian Oil Refining and Distribution Company, told reporters in Tehran that the duo had also reached agreement on the commissioning of a new pipeline.

"It was agreed that the pipeline for transferring crude oil from Basra to Abadan will be constructed and according to this agreement the two countries build the pipeline within their own territories," Mr Shahnazizadeh confirmed.

Once the pipeline is completed, 50 per cent of the oil required for Iran's Abadan refinery will be sourced from Iraq.

Earlier this week, a senior adviser in the US Iraqi reconstruction project said that the province of Babel is ready for foreign investment from oil companies and other key sectors after reconstruction of a training and development facility in the area was completed.

Written by Kimberley Bardsley.

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