Iraq inaugurated an oil refinery in the central city of Karbala on Saturday, a project the government hopes will reduce its dependency on imports.

Oil Minister Hayan Abdel Ghani announced the refinery had begun "commercial production" after a ribbon-cutting ceremony led by Prime Minister Mohammed S. Al Sudani.

It can refine 140,000 barrels daily and "help meet local demand for petrol, kerosene, and heating oil while reducing imports," Abdel Ghani said.

Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet energy needs.

The minister said the refinery, built by South Korean firm Hyundai, can produce 9 million liters of fuel a day – equivalent to more than half of Iraq's daily imports of 15 million liters.

The refinery also can produce 200 megawatts of electricity, and "60 megawatts of them will be allocated to the national grid," Abdel Ghani added.

Iraq, the second largest producer within the Organization of the Petroleum Exporting Countries (OPEC), exports an average of 3.3 million barrels daily.

Crude exports represent around 90% of the government's revenue.

Ravaged by decades of conflict, Iraq's crumbling infrastructure and endemic corruption have obstructed reconstruction efforts.

The Karbala refinery is "the first to be built since the 1980s with such production capacity," an Oil Ministry official told Agence France-Presse (AFP) when tests were run in September.

Three other refineries across Iraq meet about half of the country's demand for refined products, and the rest is imported.

In March, the prime minister announced a campaign to combat the severe impacts of climate change on the water-scarce country, including by promoting clean and renewable energy.

Sudani said Iraq was "moving forward to conclude contracts for constructing renewable energy power plants to provide one-third of our electricity demand by 2030."