UPDATE 2-Libyan militants overrun Benghazi special forces base as chaos deepens
* Benghazi forces lose base to Islamist forces, 30 killed
* Foreign diplomats flee chaos in Tripoli
* Fighting worst since the 2011 war against Gaddafi (Adds kidnapping of lawmaker)
By Ayman al-Warfalli
BENGHAZI, Libya, July 29 (Reuters) - Militant fighters overran a Libyan special forces base in the eastern city of Benghazi on Tuesday after a battle involving rockets and warplanes that killed at least 30 people.
A special forces officer said they had to abandon their main camp in the southeast of Benghazi after coming under sustained attack from a coalition of Islamist fighters and former rebel militias in the city.
"We have withdrawn from the army base after heavy shelling," Saiqa Special Forces officer Fadel Al-Hassi told Reuters.
A separate special forces spokesman confirmed the militants had taken over the camp after the troops pulled out. Part of the area is Camp 36 in the Bu Attni district and the special forces school.
Intense fighting in Benghazi, Libya's second city, and battles between rival militias in the capital Tripoli have pushed the nation deeper into chaos after two weeks of the fiercest violence since the civil war which ousted Muammar Gaddafi in 2011.
Benghazi has been at the centre of fighting between special forces and ex-rebel fighters of the Benghazi Shura Council who have joined up with the Ansar al Sharia, a militant Islamist group, residents said.
Ansar al Sharia, classified as a terrorist organisation by Washington, has been blamed by authorities for attacking the U.S. consulate in Benghazi in 2012 when the U.S. ambassador was killed.
Special forces and some regular air force units had recently joined forces with a renegade former army general, Khalifa Haftar, who had launched a self-declared campaign to clear the city of Islamist militants.
A government MiG warplane crashed during Tuesday's fighting in Benghazi. A Reuters reporter saw the pilot parachuting to ground after hearing an explosion.
Since clashes erupted two weeks ago, foreign states followed the United States and the United Nations in pulling diplomats out of the North African oil-producing state. Fighting in Tripoli between two rival brigades of former anti-Gaddafi rebels closed the capital's international airport.
A rocket hit a fuel depot near Tripoli airport two days ago, igniting a huge blaze that fire-fighters were still trying to put out. Italy's government and Italian oil group ENI had agreed to help them, the government said.
A member of the new Libyan parliament Mustafa Abushagor, due to take office in August, was kidnapped in Tripoli on Tuesday by unknown assailants, the state news agency LANA reported, citing security sources.
MILITIAS FIGHT FOR UPPER HAND
Three years after Gaddafi's fall, the OPEC nation has failed to control ex-rebel militias who refuse to disband and who are threatening the unity of the country. The extent of recent hostilities has increased Western worries that Libya is sliding towards becoming a failed state and may once again go to war.
Despite the violence, Libya's oil production remained at around 500,000 barrels per day, and its oilfields are secure, Samir Salim Kamal, director of planning at the oil ministry told Reuters on Tuesday.
That was an increase from earlier this year when unrest pushed output as low as about 200,000 bpd, but it remains well below the usual 1.4 million bpd.
While the tribal way of life declined as growing oil wealth attracted Libyans to towns and cities, traditional power structures remain strong in the nation of about six million people.
Gaddafi's strategy effectively amounted to a system of divide and rule, buying off established tribal leaders.
In Egypt, the army has proved to be the supreme political force but in the post-Gaddafi era the Libyan militias are fighting for power, influence and oil wealth.
Tripoli was quieter on Tuesday than over the last fortnight during which the two brigades of former rebels, mainly from the towns of Zintan and Misrata, have pounded each other's positions with Grad rockets, artillery fire and cannons, turning the south of the capital into a battlefield.
Nearly 200 people have died in Tripoli and Benghazi during the clashes in the two cities, according to the health ministry and local medical officials.
FUEL TANKS ABLAZE
A spokesman for the National Oil Corporation said on Tuesday the armed factions in Tripoli had agreed to a brief cease-fire to allow emergency services to fight the blazing fuel storage tanks containing millions of litres of fuel.
The tanks are operated by Brega oil company, which is owned by NOC, and store oil for consumption in Libya.
Black smoke billowed from one of the tanks hit by a rocket on Sunday near the airport road. The highway and surrounding areas were empty after homes in the area were evacuated, except for occasional militia roadblocks.
Fire-fighters were spraying the area with water to cool down storage depots near the fuel tank that was set ablaze to try to extinguish the inferno.
The United States, whose embassy is near the contested airport, evacuated its embassy staff in Tripoli on Saturday, driving diplomats across the border into Tunisia under heavy military guard including air support from warplanes.
Britain, other European governments, Turkey and the Philippines have also pulled out diplomatic staff or left just a few representatives behind in Tripoli, where the violence is also causing fuel and power shortages.
France and Spain on Tuesday were evacuating more nationals and some diplomats from Tripoli, according to LANA. Canada is temporarily pulling out its diplomats due to fears about their safety, Foreign Minister John Baird said on Tuesday. (Additional reporting by Aziz El Yaakoubi and Ahmed Elumami and Feras Bosalum in Benghazi; writing by Patrick Markey; editing by Peter Millership and David Stamp)