TRIPOLI, Libya (AP) — Libyan forces repelled a coordinated attack by NATO forces and rebels against a strategic oil town in the east of the country, the government spokesman said Thursday.
The announcement came as Libya also barred Italy, one of the country's largest investors, from its oil sector because of Rome's role in the NATO airstrikes.
Moussa Ibrahim told journalists that rebel forces attacked the town of Brega backed by NATO forces in the sea and air in a coordinated attack that he said violated the alliance's U.N. mandate to protect civilians.
"It was a full scale attack and it was heavy and merciless," he said. "We were successful in combating this attack and we did defeat both NATO and the rebels and we killed many rebel forces and captured a good number of them as well."
Ibrahim's assessment of the fighting could not immediately be verified.
NATO is enforcing a no-fly zone over Libya and hitting government targets as part of a U.N. mandate to protect civilians. It is not, however, supposed to be the military arm of rebel ground forces, which have been trying to retake Brega for months.
"It proves NATO is not interested in democracy, protecting civilians or peace," added Ibrahim.
The civil war in Libya appears to have hit a stalemate, despite a protracted NATO bombing campaign against Gadhafi-loyal forces. Rebels control eastern Libya and pockets in the west, while Gadhafi is holding on to Tripoli and large stretches of western Libya.
The attack on Brega was apparently an effort to restart the stalled war as well as capture the country's valuable oil infrastructure.
On the western front, rebels reported retaking the western mountain village of Qawalish, 70 miles (120 kilometers) from Tripoli, from government forces Thursday after losing it the day before.
Spokesman Ibrahim scoffed at various reports of rebel successes, saying their few advances were only when Gadhafi's forces temporarily withdraw to avoid air strikes.
"As we withdraw, the 150 joyous rebels go dancing around with some reporters with them," Ibrahim said. "And the moment when NATO doesn't have enough rockets or bombs, the army moves back in, kills 20 or 30 rebels, and we have the town again."
Libyan officials have warned nations involved in the NATO campaign that they could be barred from investing or participating in the country's oil sector if they continue to side with the rebels. But Italy — Libya's former colonial master — appears to be the first country to be formally barred.
"The Italian government needs to totally forget about Libyan oil and every agreement we signed in the past," Prime Minister al-Baghdadi al-Mahmoudi told reporters in the Libyan capital. "ENI will have to look elsewhere for business."
There seem to be no immediate repercussions for ENI, the largest foreign energy company in Libya, since oil production in Libya has essentially shut down.
ENI's assets are nearly evenly divided between rebel-held and government-held territory, excluding offshore sites. ENI had no comment.
The Libyan prime minister said Libya was already in negotiations with Russian, Chinese and even American companies for future oil deals. He said Italy was specifically targeted because of Italian Prime Minister Silvio Berlusconi's once-close relationship with the North African nation and a friendship pact signed by the two nations.
"To add insult to injury, Berlusconi says he never agreed to the aggression and was pushed to participate," said al-Mahmoudi, referring to Berlusconi's July 7 comments that the Italian parliament forced his hand.
"Well, if he says he was pressured to attack Libya, then I was pressured by the Libyan people to cut ties with Italy," al-Mahmoudi said.
Italy's position is that the treaty is "suspended" as a result of the Libyan regime's attacks on its own population.
Despite the U.S.'s leading role in the attacks and Secretary of State Hillary Rodham Clinton's recent remarks that Gadhafi's days were numbered, the prime minister specifically left the door open to U.S. companies because its role in the campaign is largely restricted to logistics.
"(America) reviewed its position and its participation has been much weaker and this helps the U.S. with its relationship with Libya," al-Mahmoudi said. "That's why were are prepared to work with the U.S. in the oil industry."
Libya sits atop Africa's largest proven reserves of conventional crude. But months of fighting between pro-Gadhafi forces and the rebels have essentially halted what was once about 1.6 million barrels per day of oil output — a drop that helped propel crude prices well beyond $100 per barrel earlier in the year.
ENI produced 273,000 barrels of oil and natural gas in 2010 in Libya, about 15 percent of the company's worldwide production.
Italian officials said its contracts would be guaranteed by the "legitimate representatives of the Libyan people," a veiled reference to the rebel transitional council, which it has recognized.
If the Libyan government wins the conflict and regains control of oil production, any move to cut ENI out would put it in violation of international contracts, which could mean long and costly legal battles.
Also Thursday, senior U.S. officials said the Obama administration is preparing to strengthen ties with Libya's main opposition movement as it becomes increasingly clear that the group will govern a post-Gadahfi Libya.
Traveling with Clinton to an international meeting on Libya in Turkey, the officials told reporters on the plane that Washington would bump up its relations with the Transitional National Council once it presents detailed plans for a democratic, transparent and inclusive government.
The council is expected to lay out plans for moving forward at Friday's meeting of the Contact Group on Libya in Istanbul. The officials said it was not yet clear if the presentation would satisfy concerns that the initial post-Gadhafi regime represent the full spectrum of Libyan society: all regions, all tribes and all political parties.
In Moscow, meanwhile, a Russian newspaper quoted the Kremlin's special envoy to Libya as saying Gadhafi has threatened to blow up Tripoli if the Libyan capital falls into rebel hands. Mikhail Margelov told the Izvestia newspaper that the Libyan prime minister recently told him, "If the rebels seize the city, we will deluge it with missiles and blow it up."
The Libyans, however, denied that the prime minister made such comments and said the Russians themselves had expressed bafflement over the statements attributed to Margelov.
"So now it's basically both the Libyan and Russian sides agree that such a conversation never took place and that the Libyan government never threatened that it would destroy Tripoli or any other city captured by the rebels," said Ibrahim, the government spokesman.
The Canadian general commanding NATO's mission in Libya also said Gadhafi is telling his forces to destroy facilities — including fuel refineries — as they retreat.
But the troops are not necessarily carrying out the order, Lt. Gen. Charles Bouchard said Thursday in a conference call with reporters.
Associated Press writers Alessandra Rizzo in Rome, Colleen Barry in Milan, Ben Hubbard in Cairo and David Nowak in Moscow contributed reporting.