Libya's Gadhafi claims oil field, ports safe

Leader Moammar Gadhafi says Libya's oil fields and ports are "safe" and "under control."

He said Libya will replace Western banks and companies by others from China, Russia and Brazil.

He spoke in the capital Tripoli as his forces were launching a counteroffensive Wednesday against the rebel-held eastern half of the country. His forces battled government opponents for control of a key oil installation and airstrip on the Mediterranean coast.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Forces loyal to Libyan leader Moammar Gadhafi battled government opponents for control of a key oil installation and airstrip on the Mediterranean coast in a counteroffensive Wednesday against the rebel-held eastern half of the country.

The fighting at the Brega oil port appeared to be the first significant attempt by Gadhafi's regime to push back against the large swath of territory seized by the opposition - almost the entire eastern half of the country. For the past week, pro-Gadhafi forces have been focusing on securing his stronghold in the capital Tripoli and trying to take back nearby rebel-held cities in the west, with only mixed success.

In the capital, Gadhafi vowed, "We will fight until the last man and woman" and he warned that thousands of Libyans will die if U.S. and NATO forces intervene in the conflict.

The U.S., Britain and other NATO countries are drawing up contingency plans to impose a no-fly zone over Libya to prevent Gadhafi's air forces from striking rebels. The U.S. is moving naval and air forces closer to Libyan shores and is calling for Gadhafi to give up power immediately. But any no-fly zone would need a mandate from the U.N. Security Council, where veto-holding Russia opposes the idea.

"We will not accept an intervention like that of the Italians that lasted decades," Gadhafi said, referring to Italy's colonial rule early in the 20th Century. "We will not accept a similar American intervention. This will lead to a bloody war and thousands of Libyans will die if America and NATO enter Libya."

Gahhafi also warned that anyone accepting foreign relief aid will be treated as "high treason."

Opposition members said they believe Gadhafi was pulling up reinforcements from bases deep in the deserts of southwestern Libya, flying them to the fronts on the coast.

Soon after sunrise Wednesday, a large force of Gadhafi loyalists in around 50 SUVS, some mounted with machine guns, descended on opposition-held Brega, 460 miles (740 kilometers) east of Tripoli along the Mediterranean. The force caught by surprise a small opposition contingent guarding the site, which fled, said Ahmed Dawas, an anti-Gadhafi fighter at a checkpoint outside the port.

The pro-Gadhafi forces seized the port, airstrip and the oil facilities where about 4,000 personnel work, as regime warplanes hit an ammunition depot on the outskirts of the nearby rebel-held city of Ajdabiya, witnesses said.

But by midmorning, the opposition counter-attacked. Anti-Gadhafi fighters with automatic weapons were seen speeding out of Ajdabiya in pickup trucks, heading for Brega, 40 miles away (70 kilometers) away. Dawas said they retook the oil facilities and airstrip. Other witnesses reported regime forces were surrounded by rebels. The sound of screaming warplanes and the crackle of heavy gunfire could be heard as the witnesses spoke to The Associated Press by phone.

In the afternoon, fighting was raging at a university campus outside the oil installations, where pro-Gadhafi fighters were holed up, according to an Associated Press reporter at the scene.

Machine gun and automatic weapons fire rattled in the air. Anti-Gadhafi citizen militiamen from Ajdabiya pulled up in more than a dozen vehicles and, armed with assault rifles, they moved through the dunes toward the campus next to a pristine blue-water Mediterranean beach. Those without guns picked up bottles and put wicks in them to make firebombs.

At least nine wounded opposition fighters were seen, but it was not known if there have been any deaths.

In Ajdabiya, people geared up to defend the city, fearing the pro-Gadhafi forces would move on them next. At the gates of the city, hundreds of residents took up positions on the road from Brega, armed with Kalashnikovs and hunting rifles, along with a few rocket-propelled grenade launchers. They set up two large rocket launchers and an anti-aircraft gun in the road.

Brega and nearby Ajdabiya are the furthest west points in the large contiguous swath of eastern Libya extending all the way to the Egyptian border that fell into opposition hands in the uprising that began Feb. 15.

Brega is the second-largest hydrocarbon complex in OPEC-member Libya. Amid the turmoil, exports from its ports have all but stopped with no ships coming to load up with crude and natural gas. Crude production in the southeastern oil fields that feed into the facility has been scaled back because storage facilities at Brega were filling up. General Manager Fathi Eissa said last week the facility has had to scale back production dramatically from 90,000 barrels of crude a day to just 11,000.

The unrest in Libya - which ranks about 17th among world oil producers and has Africa's largest proven oil reserves - has sparked a major spike in world oil prices. Overall crude production has dropped from 1.6 million barrels per day to 850,000.

Gadhafi's regime has been left in control of Libya's northwest corner, centered on Tripoli, but even here several cities have fallen into rebel hands after residents rose up in protests, backed by mutinous army units and drove out Gadhafi loyalists.

In recent days, loyalists succeeded in regaining two of those towns - Gharyan, a strategic town in the Nafusa mountains south of Tripoli, and Sabratha, a small town west of the capital.

But opposition fighters successfully repulsed attacks by pro-Gadhafi forces on several others: the key city of Zawiya outside the capital; Misrata, Libya's third largest city east of Tripoli; and Zintan, a town further southwest in the Nafusa mountains.

The regime may be bringing in more forces from regions it still dominates in the sparsely populated deserts in the southwest.

Residents of the southwestern oasis town of Sebha - a key Gahdafi stronghold with military bases 400 miles (560 kilometers) south of Tripoli - reported heavy movement at the airport there Tuesday night, said Abdel-Bari Zwei, one of the opposition activists in Ajdabiya in touch with sympathizers in Sebha. Zwei said it is believed some of those forces were involved in the offensive against Brega.