After nearly a week of vicious fighting, Mozambique's rebels controlled about half of the strategic town of Palma on Tuesday, deepening the humanitarian crisis in the country's north and jeopardizing the multi-billion-dollar investment in offshore gas fields. About 200 rebels armed with automatic rifles, machine guns, and mortars now control the part of Palma where government offices and banks are located, according to local media reports. Thousands of residents already have fled to nearby Tanzania and south to the provincial capital of Pemba, according to international aid agencies. More than 900,000 people in Mozambique now require food aid because of the crisis in the northern part of the country, according to the U.N. World Food Program. "It is a fast-evolving conflict situation and large numbers of people are fleeing through the bush, with nothing, nothing by the clothes on their backs," Lola Castro, the regional director for WFP told The Associated Press. "This humanitarian crisis is not going away, it's increasing." Palma's streets are deserted except for sporadic gunfire from the rebels, said Lionel Dyck, director of the Dyck Advisory Group, whose helicopter gunships are helping the Mozambican police battle the insurgents. "It's actually quite dire on the ground. It's chaos because there's still no real control and there won't be control for some time," Dyck, a retired colonel in the Zimbabwean army, told the AP on Tuesday. "We are fighting the people on the ground and we are at the same time looking for stragglers," he said. "As we are flying over areas, we look for people that are hiding in the bush ... We can use our squirrel helicopters and go out and pick up the civilians and move them to a friendly base." The insurgents, who are allied to the Islamic State group, also attacked a site on the Indian Ocean coast near Macomia last week, showing their reach across Cabo Delgado province, according to local media reports. The three-year insurgency of the rebels, who are primarily disaffected young Muslim men, has taken more than 2,600 lives and displaced an estimated 670,000 people, according to the U.N. A video posted by the Islamic State group purports to show fighters in or near Palma, but cannot be independently verified by The Associated Press. About 50 armed fighters in a mix of camouflage uniforms, black shirts, and red headscarves are gathered for what appears to be a roll call. "Permission to kill where we are going," and "Permission to cut and kill where we are going," is shouted by some men, speaking a local dialect of Swahili and Arabic. The rebels are known locally as al-Shabab (the youth in Arabic) but have no known affiliation with the jihadist rebels of the same name in Somalia. The United States last week declared Mozambique's rebels to be a terrorist organization and announced that 12 military trainers had been deployed to help the southern African country's marines. Portugal, Mozambique's former colonial power, announced Tuesday that is stepping up its military cooperation by sending 60 soldiers to help train Mozambican special forces. The European Union is also preparing "to increase security cooperation (with Mozambique), possibly via support with equipment or training," Portuguese Foreign Minister Augusto Santos Silva said in a statement. The France-based oil and gas company has pulled out of its operations on the outskirts of Palma, a multi-billion-dollar investment to pump liquified natural gas from offshore oilfields in the Indian Ocean. Earlier this year the company had said it requires an area covering a 25-kilometer (15-mile) radius to be secure from rebel violence. Palma is within that area, making it uncertain when the oil giant will resume its investment.

Fierce fighting for control of Mozambique's strategic northern town of Palma left beheaded bodies strewn in the streets Monday, with heavily armed rebels battling army, police and a private military outfit in several locations. Thousands were estimated to be missing from the town, which held about 70,000 people before the attack began last Wednesday. The Islamic State group claimed responsibility Monday for the attack, saying it was carried out by the Islamic State Central Africa Province, according to the SITE extremist monitoring group. The rebel claim said the insurgents now control Palma's banks, government offices, factories and army barracks, and that more than 55 people, including Mozambican army troops, Christians and foreigners were killed. It did not provide further detail on the dead. Also read: Indonesia rebels say they took weapons from crashed chopper Earlier this month the United States declared Mozambique's rebels to be a terrorist organization and announced it had sent military specialists to help train the Mozambican military to combat them. Palma is the center of a multi-billion dollar investment by Total, the France-based oil and gas company, to extract liquified natural gas from offshore sites in the Indian Ocean. The gas deposits are estimated to be among the world's largest and the investment by Total and others is reported to be $20 billion, one of the largest in Africa. The battle for Palma forced Total to evacuate its large, fortified site a few miles (kilometers) outside of the city. The fighting spread across the town Monday, according to Lionel Dyck, director of the Dyck Advisory Group, a private military company contracted by the Mozambican police to help fight the rebels. “There is fighting in the streets, in pockets across the town,” Dyck told The Associated Press. The Dyck group has several helicopter gunships in Palma which have been used to rescue trapped civilians and to fight the rebels. “My guys are airborne and they've engaged several little groups and they've engaged one quite large group,” Dyck said. “They’ve landed into the fight to recover a couple of wounded policemen. ... We have also rescued many people who were trapped, 220 people at last count.” He said those rescued were taken to Total's fortified site on the southern African country's Afungi peninsula, where chartered flights flew many south to Pemba, the capital of Cabo Delgado province. The rebels are well-armed with AK-47 automatic rifles, RPD and PKM machine guns and heavy mortars, Dyck said. “This attack is not a surprise. We've been expecting Palma to be whacked the moment the rains stopped and the fighting season started, which is now,” he said. “They have been preparing for this. They've had enough time to get their ducks in a row. They have a notch up in their ability. They're more aggressive. They're using their mortars.” He said many were wearing black uniforms. “There have been lots of beheadings. Right up on day one, our guys saw the drivers of trucks bringing rations to Palma. Their bodies were by the trucks. Their heads were off.” Dyck said it will not be easy for the Mozambican government to regain control of Palma. “They must get sufficient troops to sweep through the town, going house-to-house and clean each one out. That's the most difficult phase of warfare in the book,” Dyck said. “It will be very difficult unless there's a competent force put in place with good command and control to retake that town. It can be done. But it ain't going to be easy.” Also read: Rebel attack on Congolese city leaves 6 dead Without control of Palma, Total's operations are jeopardized, analysts say. The battle for Palma is similar to how the rebels seized the port Mocimboa da Praia in August. The rebels infiltrated men into the town to live among residents and then launched a three-pronged attack. Fighting continued for more than a week until the rebels controlled the town center and then its port. The town, about 50 miles south of Palma, is still held by the rebels. U.N. spokesman Stephane Dujarric condemned the violence in Palma, which he said has reportedly killed dozens of people, “including some trying to flee a hotel where they had taken shelter.” He referred to those trapped at the Amarula Hotel who tried to escape in a convoy of 17 vehicles on Friday. Only seven vehicles made it to the beach, where seven people were killed. Some in the other vehicles fled into the dense tropical jungle and were later rescued. “We continue to coordinate closely with the authorities on the ground to provide assistance to those affected by the violence,” Dujarric said. The battle for Palma is expected to drastically worsen the humanitarian crisis in Mozambique's northern Cabo Delgado province, where the rebels started violent attacks in 2017. The insurgents began as a few bands of disaffected and unemployed young Muslim men. They now likely number in the thousands, according to experts. “The attack on Palma is a game-changer in that the rebels have changed the narrative,” said one expert who returned from Palma earlier this month. “This is no rag-tag bunch of disorganized youths. This is a trained and determined force that has captured and held one town and is now sustaining a battle for a very strategic center," said the expert, who spoke on condition of anonymity because of the sensitivity of visiting Palma. "They have called into question the entire LNG (liquified natural gas) investment which was supposed to bring Mozambique major economic growth over many years.” Also read: Rebel attacks in eastern Congo kill several Ebola responders Known locally as al-Shabab, although they have no known affiliation with Somalia's jihadist rebels of the same name, the rebels' violence in Mozambique, a nation of 30 million, is blamed for the deaths of more than 2,600 people and caused an estimated 670,000 people to flee their homes. “The attack on Palma has made a bad humanitarian situation worse," said Jonathan Whittall, director of analysis for Doctors Without Borders, which is working to help the displaced around Pemba, the provincial capital 100 miles south of Palma. “Across Cabo Delgado, the situation was already extremely worrying for those displaced by violence and for those who are in areas that are difficult for humanitarian assistance to reach,” Whittall said. “This attack on Palma has led to more displacement and will increase the needs that have to be addressed as a matter of urgency.” “For too long northern Mozambique has been a neglected humanitarian crisis,” Whittall said, adding that his organization is exploring ways to expand its emergency response.