* Ethiopia Ogaden rebel claims said to be exaggerated
* Hundreds said killed in fierce fighting in oil-rich region
* Rebel leader warns foreign oil companies
JIJIGA, Ethiopia, Dec 11 (Reuters) - A rebel group's claims to have captured seven towns and killed 1,000 soldiers in fierce fighting in Ethiopia's oil-producing Ogaden region are almost certainly exaggerated, foreign aid workers in the region say.
Ethiopia's Ogaden National Liberation Front (ONLF) staged bold raids on government positions last month and aid workers say several hundred people were probably killed on both sides.
But while the guerrillas are capable of causing instability in the vast Somali region, which includes the Ogaden and accounts for one-fifth of the country's landmass, experts say they cannot hold territory.
"They attacked more than twenty places," one aid worker, who asked not to be identified, told Reuters in Jijiga, the regional capital. "But they only managed to take one town, not seven."
A culture of secrecy and suspicion has surrounded the volatile Ogaden region ever since the ONLF overran a Chinese oilfield in 2007 and killed 74 people.
Now that foreign firms including Malaysia's Petronas [PETR.UL] and Vancouver-based Africa Oil Corporation <AOI.V> are back at work in the region, some are wondering whether the investment will be worth the risk.
Ethiopia is offering up to 14 more exploration permits over the next three years, and the government is keen to make sure the guerrillas do not attack again.
The rebels routinely warn oil companies to stay away.
"The people of Ogaden want to have their mineral wealth developed, but not if it will be used to subjugate them further, which will be the case if the regime attains this wealth," Abdirahman Mahdi, the ONLF's foreign secretary, told Reuters.
Most analysts say the group has no chance of overthrowing the government.
"In the Somali region they can carry out hit-and-run assaults on government sites as well as on outposts of foreign entities, like Chinese energy explorers," Mark Schroeder, an Africa analyst with Stratfor, told Reuters.
"But they cannot hold large stretches of territory."
"STRUGGLE FOR SELF-DETERMINATION"
Journalists are not allowed to travel in Ogaden without an escort and have been arrested and expelled from the country for doing so. Reuters went to the Ogaden with the U.S. ambassador to the U.N.'s food agencies, Ertharin Cousin.
In heavily-protected Jijiga, soldiers patrol a nervous population. Foreign aid staff return to protected compounds before a 9 p.m. curfew. Cafes and bars have been attacked with grenades.
The region borders chaotic Somalia. The part known as the Ogaden after the region's largest clan is the centre of conflict between the ONLF and government soldiers and militias.
Mahdi, who rarely speaks to the media, told Reuters the rebels wanted a referendum on independence for the region's Muslim, ethnic Somali people. And he dismissed claims the ONLF was helping Somalia's Islamist al Shabaab rebels, who are waging a violent war against that country's U.N.-backed government.
"The ONLF, as a matter of policy and principle, does not and will not collaborate with extremist organisations," he said. "This is a struggle for self-determination."
Analysts say that, along with its potential mineral wealth, the desert region's location between Somalia and Addis Ababa makes the Ethiopian government determined to hold on to it after a long history of hostilities with its neighbour.
The government says the ONLF has no popular support and is funded by rival Eritrea in an attempt to destabilise Ethiopia.
Bereket Simon, the Ethiopian government's head of information, told Reuters the rebels had regrouped since 2007, but called November's attacks a "last desperate act".
Locals said the rebels were believed to be planning more assaults.
The rebels and the government routinely accuse each other of terrorising the local population, burning villages and murdering and raping civilians.
The ONLF accuses government forces of stopping food aid and commercial supplies from reaching their strongholds, putting thousands of drought-affliced civilians at risk of starvation.
Ambassador Cousin's visit was carefully managed by the United Nations and the Ethiopian government. Her convoy rarely left main roads, and she said saw no evidence of the ONLF charges.
(Editing by Daniel Wallis and Paul Taylor)
- Reuters - Thomson Reuters Foundation
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