* Rebels clear western refinery of Gaddafi loyalists
* Rebels cut highway north to Tripoli at Garyan
* Sabratha in west now in hands of insurgents
* Former French premier de Villepin held talks
* ICRC concerned by mounting casualties (Refiles to clarify headline)
By Yvonne Bell and Ulf Laessing
ZAWIYAH, Libya, Aug 18 (Reuters) - Libyan rebels seized an oil refinery in the city of Zawiyah and took control of Sabratha further west on the main highway from Tripoli to Tunisia on Thursday, further isolating Muammar Gaddafi’s stronghold.
Some 200 rebel fighters firing guns in the air celebrated the capture of Sabratha about 80 km (50 miles) west of Tripoli after a four-day battle with pro-Gaddafi government troops.
Fighters said the rebels now control 90 percent of the ancient Roman town of Sabratha, a UNESCO World Heritage site. Securing it would tighten the insurgents’ control over supply lines from Tunisia, which were cut at Zawiyah this week.
A local man said the breakthrough came when NATO bombed a military training facility in the centre of Sabratha. After that strike, the rebels stormed the facility and seized weapons.
Rebel advances in recent days have cut Gaddafi’s forces off from their main international resupply routes following a months-long stalemate, putting the Libyan leader’s 41-year rule under unprecedented pressure.
But insurgents in the east, where casualties have been high, suffered a setback when a small number who had been planning to mount an armed uprising in government-held Zlitan were pre-empted by better-armed Gaddafi forces.
“There are still bodies in the streets. The situation is very difficult. It was a preemptive attack by Gaddafi’s forces,” an anti-government activist called Mohammed told Reuters by telephone from the town west of the rebel-held port of Misrata.
Four people were killed and five badly wounded in clashes between Gaddafi forces and poorly armed local rebels planning to stage a “mini” armed uprising to coincide with a push by Misrata rebels toward Zlitan, he said.
Gaddafi forces found out about the plan and moved in. The rebel band ran out of ammunition by midday.
Despite denials from both sides, the rebels and Gaddafi loyalists are in negotiations, former French prime minister Dominique de Villepin told a French newspaper.
He said he had “extremely difficult” talks with both on Monday in the Tunisian resort of Djerba.
“I was indeed there, but I cannot make any further comment because it would compromise the chances of success and the efficacy of these talks,” de Villepin told Le Parisien.
The French government declined comment.
After a two-day battle, rebel fighters occupied Zawiyah refinery, 50 km west of Tripoli.
“We took control last night,” said Saleh Omran, 31, a rebel fighter from Zawiyah. He said rebel forces fought about 150 Gaddafi troops, who finally fled by sea in inflatable boats.
Doctors at a hospital near Zawiyah said nine people were killed and at least 45 injured in fighting around the town and at the refinery on Wednesday, most of them rebels. A Grad rocket fired by Gaddafi forces had hit a house near the hospital.
In Geneva, the International Committee of the Red Cross (ICRC) said health care facilities in Libya were being attacked or misused for military purposes by both sides in the conflict.
The ICRC expressed concern at a rapid deterioration in the humanitarian situation — as well as mounting casualties — in and around Brega, Zawiyah, Garyan, Sabratha and Misrata.
“On Tuesday, in Brega, our delegates saw several ambulances hit by bullets,” said Georges Comninos, the head of the ICRC delegation in Tripoli. “This is seriously compromising the delivery of health care to the wounded and sick.”
Rebels also hold Garyan, a strategic crossroads town 80 km (50 miles) from Tripoli on the main highway south.
“We took one tank and an anti-aircraft gun from Gaddafi’s forces. Next, we’ll go to Tripoli,” a fighter called Mohammed told Reuters in Garyan. Captured weapons sat in the town square.
Rebel forces advanced several kilometres north of Garyan later in the day, clashing with pro-Gaddafi fighters. Black smoke billowed from the direction of the fighting and gunfire and the explosions of rockets could be heard.
A spokesman for Gaddafi played down recent rebel gains and said the government remained in control of the country.
“This is a crisis that will last a few days and then it will be — God willing — overcome,” said Moussa Ibrahim in remarks carried by JANA news agency on Thursday. “We will push ahead until we liberate the whole country.”
Gaddafi’s whereabouts are unknown.
On the eastern front, rebel forces said they had tightened their grip around the oil town of Brega, but had suffered high casualties in fighting over the past several days.
“All of Alargop is now free, liberated,” spokesman Musa Mahmoud al-Mugrabi said of the area 6 km south of Brega, on a supply route for Gaddafi’s forces running south.
“Casualties have been very high because it’s urban clashes,” he said. About 40 rebels have been killed and nearly 100 wounded in and around Brega over the past 10 days, according to a tally of reports from the rebels and hospital workers.
The 69-year-old Gaddafi seems isolated, with rebel forces closing in and vowing to enter Tripoli by the end of the month. A Reuters reporter in Tripoli, where military targets have been pounded by NATO warplanes for five months, said a few explosions were heard from the centre of the city around midday.
Rebel forces said they were about 100 km west of the rebel-held port of Misrata on the road to Tripoli.
Libyan Prime Minister Al-Baghdadi Ali Al-Mahmoudi denied Zawiyah refinery was in rebel hands.
“In terms of the military, we are indeed powerful enough to finish this battle to our advantage, but the cost would be too high,” he told reporters in Tripoli. (Additional reporting by Tom Miles in Geneva, Robert Birsel in Benghazi, Missy Ryan in Tripoli, Michael Georgy in the western Mountains, Hamid Ould Ahmed in Algiers, Souhail Karam in Rabat; Joseph Nasr in Berlin, Alexandra Sage in Paris; Stephanie Nebehay in Geneva; Writing by Douglas Hamilton; Editing by Alastair Macdonald and Louise Ireland)