Embattled Libyan leader Moamar Gaddafi has ordered his security forces to sabotage the country's oil facilities, according to Time magazine.

In a column posted on Time's website, intelligence columnist Robert Baer said the sabotage would begin by blowing up pipelines to the Mediterranean.

But he added that his source, which was close to the government, had also told him two weeks ago that unrest in neighbouring countries would never spread to Libya - an assertion that has turned out to be wrong.

"Among other things, Mr Gaddafi has ordered security services to start sabotaging oil facilities," Baer wrote.

"The sabotage, according to the insider, is meant to serve as a message to Libya's rebellious tribes: It's either me or chaos."

Baer, a former Middle East CIA officer, said the source told him that as of Monday Mr Gaddafi had the loyalty of only about 5,000 of the country's 45,000-strong regular army.

Paraphrasing the source, he said that Mr Gaddafi had also ordered the release of Islamist militant prisoners in hopes they would act on their own to sow chaos.

Earlier today, Mr Gaddafi declared he would not step down and ordered his followers to "capture the rats".

He said standing down would be an embarrassment to his ancestry and he would die as a martyr leading what he called the "revolution".

The growing violence in Libya, Africa's third-largest oil producer, has forced a number of oil companies to shut and disrupted flows from the country's export terminals.

Security forces have cracked down fiercely on demonstrators across the country, with fighting spreading to Tripoli after erupting in Libya's oil-producing east last week.

Halting production

Two more oil companies have halted output as unrest keeps crude prices near a two-and-a-half-year high.

A pipeline bringing Libyan natural gas to Italy was also closed and export terminals that ship both crude and oil products were disrupted as violence and confusion gripped the country that pumps nearly 2 per cent of world output.

Oil prices, which surged yesterday, steadied as Saudi Arabia reassured consumers OPEC members would be ready to meet supply shortages, while an official at the International Energy Agency said it stood ready to release stockpiles in the event of a real disruption.

Several oil companies said they were shutting down operations as they evacuated staff.

US oil companies including Occidental Petroleum Corp said production was unaffected.

Spain's Repsol and Italy's Eni said they had shut in production. A day earlier, BASF unit Wintershall confirmed it was winding down output of as much as 100,000 barrels per day (bpd).

The companies did not specify the oil volumes affected but Repsol said it shut the El-Sharara oilfield, which an industry source said pumps about 200,000 bpd - 13 per cent of Libya's estimated 1.6 million bpd.

A number of companies including BP, Royal Dutch Shell and Suncor Energy Inc said they were pulling out staff, but had not confirmed any production impact.

- Reuters