TRIPOLI - A rebel movement in oil-rich eastern Libya said Sunday it had formed a regional oil firm to manage the production and sales of oil and gas, challenging the central government and its revenue lifeline.

Abd-Rabbo al-Barassi, prime minister of the self-declared government of Cyrenaica, or Barqa in Arabic, said the firm would be based for now in Tobruk, a port city on Libya's eastern Mediterranean coast near the border with Egypt, before moving to Benghazi.

Libya's current oil output is at a fraction of its capacity of 1.25 million barrels a day. The government would face a deficit from next month because of the disruption of around 60 percent of Libya's oil exports, mostly from the eastern region, said Ali Zeidan, prime minister of the interim government.

Shortly after the declaration of the establishment of the Eastern oil firm, Zeidan issued a deadline for the rebels to lift their siege of the oil and gas plants in the region within ten days.

Zeidan said taking the oil fields to serve political or personal interests was unacceptable and the central government would take action if the rebels would not respect the ultimatum.

He urged citizens to protest the continued blockade of the oil fields "to avoid bloodshed and the destruction of oil infrastructure" that could result in if troops are sent in.

However, Barassi said "statements made by Zeidan do not deserve even a reply as we are moving at a steady pace."

In late October, leaders of the rebel movement unilaterally declared the eastern region of Cyrenaica an autonomous state. They blamed the central government in Tripoli for corruption and mismanagement of national oil revenues.

In the west, protestors of the Amazigh minority community shut down on Monday the natural gas submarine Green Stream pipeline at the Mellitah terminal, demanding more political rights. The pipeline, running from Libya to Italy, was owned by Italy's ENI and Libya's state-owned National Oil Corporation.

They also closed gas facilities in the western mountainous city of Nalut.

"It would be a grave matter if gas exports got blocked...they might look for other sources and leave us," Zeidan said, stressing Italy is his country's biggest partner as it imports between 23 and 25 percent of its oil needs.

In October, Tuareg protesters attacked the oil field of El Sharara, operated by Spain's Repsol oil company.