(Adds Kerry at refugee camp, power cuts in Syria)
* Fighting between Kurds and Islamists spreads in Syria
* Syrian Kurds seize control of town on Turkish border
* Dozens killed, oil fields now under threat
* Syrian oil output has plunged since revolt began in 2011
By Erika Solomon and Jonathon Burch
BEIRUT/ANKARA, July 18 (Reuters) - Kurdish fighters have seized control of a Syrian town on the border with Turkey and are battling Islamist rebel groups linked to al Qaeda for control of oilfields in the northeast of the country.
The fighting is further evidence that the conflict between rebels and President Bashar al-Assad's forces that has engulfed Syria since early 2011 has splintered into turf wars that have little to do with ousting him.
In southern Syria, attacks by rebels on gas and fuel pipelines that supply power stations caused widespread electricity outages, Syria's official news agency said.
Across the border in Jordan, U.S. Secretary of State John Kerry visited a refugee camp and was told by angry Syrians that the United States should set up a no-fly zone and safe havens in Syria to protect them.
The capture of Ras al-Ain by the Democratic Union Party (PYD), a Syrian Kurdish party with links to Kurdish militants in Turkey, rang alarm bells in Ankara.
The Turkish government fears the emergence of an autonomous Kurdish region in Syria could embolden home-grown militants of the Kurdistan Workers' Party (PKK), which is fighting for autonomy in Turkey.
In a statement late on Wednesday, the Turkish military said Ras al-Ain had fallen under the control of the PYD, which it described as a "separatist terrorist organisation". Fighting in the town had now stopped.
Turkish troops had shot at PYD fighters in Syria after two rocket-propelled grenades fired from Syria struck a border post on the Turkish side of the frontier.
It was the second time in as many days the military has answered in kind after several stray bullets from Syria struck the Turkish town of Ceylanpinar on Tuesday. The military has now strengthened security along that part of the border.
FIGHTING SPREADS
Clashes in Ras al-Ain between Kurdish militias, who broadly support an autonomous Kurdish region, and Islamist fighters of the Nusra Front broke out on Tuesday after Nusra fighters attacked a Kurdish patrol and captured a gunman, the Syrian Observatory for Human Rights said.
The Observatory, a pro-opposition monitoring group, said fighting had now spread deeper into the largely Kurdish province of Hassakeh and battles were raging around the Rumeilan oil field, about 200 km (125 miles) east of Ras al-Ain.
The field had mostly been shut down, opposition activists said, but a few of its pipelines may still be supplying refineries in the government-held cities of Homs and Baniyas.
Since March 2011, when the uprising against Assad began, Syria's overall oil production has fallen by nearly 60 percent to 153,000 barrels per day last October, the U.S. Energy Information Administration estimates.
The Observatory said at least 29 people had been killed since fighting between Islamists and Kurds erupted on Tuesday.
Kurdish units have seized an oil field area called Suwaidiya 20 and there are clashes in Suwaidiya oil region 3, according to the Observatory.
It said the Nusra Front and others al Qaeda-linked fighters were shelling Ras al-Ain from nearby positions
"Part of the reason for the spread is just anger at the Kurdish consolidation of control in Ras al-Ain, it's like revenge and punishment," said one activist who works with the rebels and who asked not to be named.
GROWING STRUGGLE
"But I also believe there this is part of a growing struggle for control of oil and gas in the region and the rebels are using this as an opportunity."
Nawaf Khalil, a spokesman for the Kurdish PYD, said the Kurds would fight back to maintain the autonomous zone they had set up in the area.
"We fought hard to drive out the repressive regime and its army and we liberated the area from oppression. We will not allow either regime control or these al Qaeda-linked groups.
"What is pushing them to fight us is their antagonism against our autonomous rule in Kurdish areas. I believe their other goal is Rumeilan because it is an important oil resource."
The fighting indicated the collapse of a deal, negotiated by prominent Syrian opposition leader Michel Kilo, under which both sides in the area had cooperated peacefully for months.
Visiting a camp that holds 115,000 Syrian refugees in Jordan near the Syrian border, Kerry heard refugees vent their anger at the world's failure to end a war that has claimed more than 90,000 lives.
He told them Washington was considering various options, including buffer zones for their protection, but that the situation was complex and much was still under consideration.
"What are you waiting for?" a Syrian woman, who did not give her name, asked Kerry at the United Nations' Zaatari refugee camp. "At least impose a no-fly zone or an embargo."
In London, sources told Reuters that Britain had abandoned plans to arm the rebels and now believed Assad might survive in office for years.
The sources also said a peace conference to try to end the conflict might not happen until next year if at all.
"Britain is clearly not going to arm the rebels in any way, shape or form," said one source.
The reason for the shift was the largely hostile public opinion and fears that any weapons supplied could fall into the hands of Islamists.
"It will train them, give them tactical advice and intelligence, teach them command and control. But public opinion, like it or not, is against intervention," the source said.
In southern Syria, the Observatory reported heavy shelling in the Damascus countryside. There were also further shelling of the city of Homs, where fighting has raged for the past three weeks. Clashes erupted in the towns of Deraa and Quneitra in southern Syria, the Observatory said. (Additional reporting by Arshad Mohammed in Jordan; Anfrew Osborn, Guy Faulconbridge and Paul Taylor in London,; Writing by Giles Elgood, Editing by Angus MacSwan)
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