Wounded soldiers protested outside western Libya's main oil refinery on Thursday, closing operations for a second time this month, a company spokesman said, and raising fears of a petrol shortage in the war-battered country.

A large crowd of veterans of the civil war which ousted Muammar Gaddafi last year massed outside the plant run by the Zawiya Oil Refining Company demanding compensation and treatment, said staff.

"We are in a state of total shutdown ... the demonstrators are preventing employees from entering the refinery and fuel trucks are unable to leave," said Zawiya spokesman Essam al-Muntasir.

"Many of them (the veterans) want the government to send them abroad to receive treatment or they want to get more money from the government as compensation for their efforts," he added.

A number of protests outside refineries have posed a significant challenge to Libya's new government which is dependent on oil for the lions' share of its revenues.

The administration is still struggling to impose order on a vast and divided country still awash with arms and militias after the fall of Gaddafi.

A similar protest in early November forced the refinery to shut down for two days, hitting fuel supplies in Tripoli.

A Zawiya security official who refused to be named said the protesters had set up check points to stop vehicles coming in.

Deputy Oil Minister Omar Shakmak said on Wednesday a shutdown at the refinery could cause a new shortage.

"We have enough fuel stored in Tripoli to last us 25 days but the problem is that protesters are not allowing trucks in or out of the fuel storage areas of the refinery," he said.

Tripoli residents formed long queues at petrol stations to fill up their tanks on Wednesday night after hearing the news of the latest protest.

The Zawiya refinery, about 50 km (30 miles) west of Tripoli, has a capacity of 120,000 barrels per day and provides 40 per cent of western Libya's oil needs. – Reuters