CAIRO (Reuters) - Egypt's state-owned Middle East Oil Refinery (Midor) seeks to raise $400 million with an initial public offering (IPO) in the last quarter of 2015, three sources with direct knowledge of the process said on Tuesday.

Midor, Egypt's largest oil refinery, plans to expand its output during the next two years. It provides around 25 percent of the petroleum products consumed by the local market.

It is not yet known whether the IPO will be denominated in U.S dollars or Egyptian pounds.

"The IPO will involve issuing new stocks to increase the company's capital which stands now at $1.1 billion," a source said.

The Midor refinery, which is based in the coastal city of Alexandria, is expected to increase its capacity to 160,000 barrels per day (bpd) by end-2017 from 100,000 bpd now.

(Reporting by Ehab Farouk; Writing by Mahmoud Mourad; Editing by Sylvia Westall and Louise Heavens)