BAGHDAD (Reuters) - The Iraqi army has dislodged Islamic State from the Qayyara oil producing region located south of their de facto capital Mosul, Prime Minister Haider al-Abadi said on Thursday.

"The liberation of Qayyara is an important step toward achieving the larger goal of restoring Mosul province," according to tweets from Abadi's media office.

Iraqi forces last month captured the Qayyara airbase which it plans to use as a hub to support forces advancing on Mosul, 60 km (38 miles) further north.

Abadi hopes to defeat the group this year by capturing Mosul, the largest city under its control in both Iraq and Syria.

The Qayyara region produces heavy sour crude and has a small refinery to process some of the oil.

(Reporting by Maher Chmaytelli and Stephen Kalin; Editing by Richard Balmforth)