@SannriS. Tan 三里
* Transitional leaders say oil output to resume at key fields
* Interim oil minister says "we know where Gaddafi is"
* Says Gaddafi redoubt of Bani Walid may have changed sides
By Mohammed Abbas and Maria Golovnina
TRIPOLI/MISRATA, Libya, Sept 3 (Reuters) - Libya's provisional government said it was closing in on bastions of support for Muammar Gaddafi on Saturday and planned to resume oil production at key fields within days.
Offering Libyans some hope of an end to conflict and a more prosperous future after 42 years of Gaddafi's personal rule, Ali Tarhouni, the interim oil minister said, during a news conference in Tripoli that he had been told by commanders that the pro-Gaddafi bastion of Bani Walid may have changed sides.
A senior military source in the forces of the National Transitional Council had told Reuters earlier that NTC leaders were close to reaching agreement with tribal leaders in Bani Walid on their imminent peaceful surrender.
Tarhouni reaffirmed assurances by the former rebels that Gaddafi's capture was near -- "we know where he is", he said.
And he announced that oil production would start in about 10 days. "Production will begin in the Sarir and Misla fields on the 12th or 13th of this month," he said.
With only six million people scattered across vast tracts of desert on the southern shore of the Mediterranean, Libyans hope Africa's biggest oil reserves can make them rich.
NTC leaders, many of whom remain in the eastern city of Benghazi where the uprising began in February, say the conflict will only be over when Gaddafi is found, dead or alive.
Last week, a senior NTC commander said he believed the 69-year-old fugitive was around Bani Walid, a tribal stronghold some 150 km (100 miles) southeast of the capital, along with his son Saif al-Islam, long seen as the heir apparent. Both men have made broadcasts this week declaring plans to fight back.
Their spokesman, Moussa Ibrahim, speaking from hiding, told Reuters on Friday that Saif al-Islam was in suburbs south of Tripoli. A source with links to Bani Walid said tribal leaders in the town were hoping to negotiate a peaceful entry to the area by NTC forces -- they were seeking assurances that former pro-Gaddafi fighters would not face reprisals.
BANI WALID "UNDER CONTROL"
Tarhouni said on Saturday: "The military council in Tripoli has just informed me a few minutes ago that there's a possibility that Bani Walid will join the revolutionaries and it's under the control of the revolutionaries."
He gave no details. NTC military commanders have said that they have thousands of fighters on hand around Bani Walid in the desert and Gaddafi's home town of Sirte on the coast. But NTC leaders have extended a deadline for surrender by a week to next Saturday, saying they want to avoid further bloodshed.
NTC chief Mustafa Abdel Jalil told a news conference in Benghazi: "We have given one week's notice to Sirte, Bani Walid, Jufrah and Sabha. This notice does not mean that we are not aware of what Muammar Gaddafi's loyalists are doing.
"We are tracking everything."
Ahmed al-Amal, a unit commander on the front line between Misrata and Sirte, told Reuters: "We are preparing to advance on Sirte ... We're watching the situation in Sirte and Bani Walid closely. There are pockets of resistance everywhere in these areas and also to the south near Sabha.
"Refugees coming out of Sirte have told us there's no food, fuel, water or electricity in the city. Gaddafi families in Sirte are forcing civilians to obey. They are mistreating them. A lot of people are angry and fed up."
Independent accounts from Sirte, Bani Walid and Sabha, deep in the Sahara desert, have not been available as communications appear to be largely cut off. On Friday, the International Committee of the Red Cross (ICRC) called on all sides to protect civilians and allow the agency to provide aid to Sirte.
NO REVENGE
The new leadership says it is anxious to foster national reconciliation in a country where Gaddafi long exploited tribal, ethnic and regional differences to maintain his grip.
Speaking of the siege of Sirte, Tarhouni said: "My call and that of all my brothers in the committee, is that we have no desire for revenge. And as you have seen from revolutionaries up till now, this revolutionary power is a good power, and does not practice any form of revenge. On the contrary, they have treated groups they know are killers with respect."
"This is my call ... to our brothers in Sirte: take part in this revolution. You will have safety, except for those who have blood on their hands, or those who have stolen public funds or those who have terrorised the Libyan people. Even those people will be treated in a legal way."
In Britain, one of the NTC's Western allies, Foreign Secretary William Hague said the leaders in Tripoli "want to avoid an unnecessary battle and that is why they have been negotiating with the tribes around Sirte".
"We should give the NTC the credit for how they have performed ... over the five months of this conflict, because we have had no widespread or substantiated reporting of them causing serious civilian casualties," he told Sky News.
In Tripoli, life on the streets was getting back to normal after the fighting last month and the past week's Muslim holiday of Eid al-Fitr. Traffic was heavy as supplies of fuel improved. Cafes were busy and offices opened for business. (Reporting by Christian Lowe and Mohammed Abbas in Tripoli, Maria Golovnina and Alex Dziadosz in Misrata, Sherine El Madany in Umm Qundil, Emma Farge in Benghazi, Marie-Louise Gumuchian, Barry Malone and Alastair Macdonald in Tunis, Amena Bakr and Omar Fahmy in Cairo and Olesya
