(Corrects time frame for oil output)
* New Gaddafi broadcast calls on supporters to fight back
* International powers call on Gaddafi to end bloodshed
* New rulers seeking urgent release of funds
* New oil chief hopes exports to resume in 2-3 months
By Peter Graff and Ulf Laessing
TRIPOLI, Aug 25 (Reuters) - Muammar Gaddafi taunted his Libyan enemies and their Western backers on Thursday as rebel forces battled pockets of loyalists across Tripoli in an ever more urgent quest to find and silence the fugitive strongman.
Rumours of Gaddafi or his sons being cornered, even sighted, swirled among excitable rebel fighters engaged in heavy machinegun and rocket exchanges. But two days after his compound was overrun, hopes of a swift end to six months of war were still being frustrated by fierce rearguard actions.
Western powers demanded Gaddafi’s surrender and worked to release frozen Libyan state funds, hoping to ease hardships and start reconstruction in the oil-rich state. But with loyalists holding out in the capital, in Gaddafi’s coastal home city and deep in the inland desert, violence could go on for some time, testing the ability of the government in waiting to keep order.
“The tribes ... must march on Tripoli,” Gaddafi said in an audio message broadcast on a sympathetic TV channel. “Do not leave Tripoli to those rats, kill them, defeat them quickly.
“The enemy is delusional, NATO is retreating,” he shouted, sounding firmer and clearer than in a similar speech released on Wednesday. Though his enemies believe Gaddafi, 69, is still in the capital, they fear he could flee by long-prepared escape routes, using tunnels and bunkers, to rally an insurgency.
Diehards numbering perhaps in the hundreds were keeping at bay squads of irregular, anti-Gaddafi fighters who had swept into the capital on Sunday and who were now rushing from one site to another, firing assault rifles, machineguns and anti-aircraft cannon bolted to the backs of pick-up trucks.
In a southern district close to the notorious prison of Abu Salim, the rebel forces launched a concerted assault, sweeping from house to house.
While random gunfire broke out periodically across the city, some of its two million residents ventured out to stock up on supplies. Aid agencies sounded an alarm about food, water and also medical supplies, especially for hundreds of wounded.
But the new leadership said it had found huge stockpiles in Tripoli which would meet all demands for food, drugs and fuel.
In another sign of optimism, the official taking charge of financial and energy affairs told Reuters that Libya hoped to resume exporting crude oil in months and that damage to oil facilities during the fighting had been less than feared.
“The NOC (National Oil Corporation) initial estimate is that we can have about 500,000 to 600,000 barrels within two to three months,” Ali Tarhouni said. “And then we ramp this up to the normal, which is about 1.6 (million). My expectation is that this will be done within a year or so.
“The state of the oil fields are a lot better than expected ... Most of the fields are more than 90 percent fine.”
It was the first time an official from the rebel National Transitional Council was seen in the capital taking up the reins of government.
Nonetheless, in order to begin installing an administration in a nation run by an eccentric personality cult for 42 years, to offer jobs to young men now bearing arms and to heal ethnic, tribal and other divisions that have been exacerbated by civil war, Libya’s new masters are anxious for hard cash quickly.
“We need urgent help,” Mahmoud Jibril, the head of the government-in-waiting, told Italian Prime Minister Silvio Berlusconi in Milan as Western leaders tried to persuade others at the United Nations to ease sanctions and a freeze on Libyan foreign assets that were imposed to punish Gaddafi.
Some governments, notably in Africa where there was some sympathy for Gaddafi’s view of his Western enemies as colonialist aggressors, have been reluctant to agree so far.
After a meeting of officials in Istanbul, the Contact Group of allies against Gaddafi called on Libyans to avoid revenge.
“The participants attached utmost importance to the realisation of national reconciliation in Libya,” it said. “They agreed that such a process should be based on principles of inclusiveness, avoidance of retribution and vengeance.”
The group also urged the United Nations Security Council to pass a resolution freeing up cash quickly.
Jibril said the uprising, the bloodiest so far of the Arab Spring, could fall apart if funds were not forthcoming quickly: “The biggest destabilising element would be the failure ... to deliver the necessary services and pay the salaries of the people who have not been paid for months.
“Our priorities cannot be carried out by the government without having the necessary money immediately,” he said.
Gaddafi’s opponents fear that he may rally an insurgency, as did Saddam Hussein in Iraq, should he remain at large and, perhaps, in control of funds salted away for such a purpose.
Western powers, mindful of the bloodshed in Iraq, have made clear they do not want to engage their troops in Libya. But a U.S. State Department spokeswoman said Washington would look favourably on any Libyan request for U.N. police assistance — something some say might aid a transition to democracy.
Rebel leaders, offering a million-dollar reward, say the war will be over only when Gaddafi is found, “dead or alive”.
The ex-international high representative in Bosnia, Paddy Ashdown, told Reuters there was a need for speed if Libya’s new rulers were to avoid a lingering threat from their predecessor, unlike what transpired in the former Yugoslavia and Iraq.
“The best time to capture these defeated leaders is immediately after the conflict finishes,” Ashdown said. “The longer it takes the more chance they have of being spirited away to a place which is much more difficult to find.”
The U nited States and NATO are also deeply concerned about possible looting and resale of weapons from Libyan arsenals as Muammar Gaddafi’s rule crumbles, though the U.S. State Department said it believes Libya’s stocks of concentrated uranium and mustard agent are secure.
With fighting raging in Tripoli, there was evidence of the kind of bitter bloodletting in recent days that the rebel leaders are anxious to stop in the interests of uniting Libyans, including former Gaddafi supporters, in a democracy.
A Reuters correspondent counted 30 bodies, apparently of troops and gunmen who had fought for Gaddafi, at a site in central Tripoli. At least two had their hands bound. One was strapped to a hospital trolley with a drip still in his arm.
All the bodies had been riddled with bullets.
Elsewhere, a British medical worker said she had counted 17 bodies who she believed were of prisoners executed by Gaddafi’s forces. One wounded man said he had survived the incident, when, he said, prison guards had sprayed inmates with gunfire on Tuesday as the rebel forces entered Gaddafi’s compound.
French magazine Paris Match quoted an intelligence source saying Libyan commandos found evidence that he had stayed at a safe house which they raided on Wednesday. NATO was helping the rebels with intelligence and reconnaissance, Britain said, and its jets kept up their bombing campaign overnight.
“There are areas of resistance by the regime which has had considerable levels of military expertise, still has stockpiles of weapons and still has the ability for command and control,” said British Defence Minister Liam Fox.
“They may take some time to completely eliminate and it is likely there will be some frustrating days ahead before the Libyan people are