Clashes between Al-Qaeda militants and the army in Yemen's restive south killed 34 people, mostly jihadists, as soldiers advanced on the city of Zinjibar, the defence ministry said on Friday.

"Eighteen Al-Qaeda militants were killed and dozens wounded while the rest fled" the clashes on the outskirts of the extremists' stronghold, which Yemeni troops have been trying to retake since May, the ministry's website said.

"Two soldiers were also killed while seven others were wounded" in the clashes that erupted late on Thursday, it said.

AFP could not independently verify the toll.

The ministry said the army had "made a major advance towards Zinjibar, driving out the terrorist Al-Qaeda elements from several positions they held."

Separately, troops and tribal volunteers killed 14 militants east of the town of Loder, which the militants have been attempting to capture for the past two weeks, state news agency SABA quoted a local official as saying.

Since May 2011, the army has been battling the extremist group's Yemeni branch, known as the Partisans of Sharia (Islamic law), which took over Zinjibar, in an attempt to regain control of the capital of Abyan province.

The website also reported that Islamist insurgents were planning to target gas terminals and companies in Belhaf in Shabwa province, with "six bomb-laden cars driven by six suicide bombers."

"The interior ministry has given orders to Shabwa security services to deal seriously with this information and to take the security measures needed to foil this terrorist plot by Al-Qaeda," it said.

It also urged a tightening of security measures around gas terminals and companies.

Earlier this month, the Islamists sabotaged a 320-kilometre (200-mile) gas pipeline linking Marib province to Belhaf terminal on the Gulf of Aden.

Yemen LNG, which said at the time that production was stopped, said in a statement that the pipeline would restart operations on Friday.

"Six LNG cargoes had to be cancelled further to the sabotage (but) all May cargoes will be loaded on schedule," said the statement on the company's website.

"We will increase LNG production to redeliver as much of the cancelled cargoes as possible before year end," Francois Rafin, general manager of the company, said in the statement.

"We are confident in the prompt reinforcement of the surveillance and protection of the pipeline," said Rafin.

Meanwhile in Sanaa, the interior ministry said it beefed up security around the Saudi embassy and the ambassador's residence, after the kingdom announced on Tuesday that Al-Qaeda in the Arabian Peninsula was holding a kidnapped Saudi diplomat.

An AQAP member told the Saudi ambassador in a telephone call that the group was "responsible for the kidnapping of the deputy consul in Aden, saying their demands include handing over several prisoners to members of the network in Yemen," Saudi news agency SPA said.

Al-Qaeda has exploited a decline in Yemeni central government control that accompanied Arab Spring-inspired protests since last year that finally forced president Ali Abdullah Saleh to resign.

[Photo of Yemeni soldier via AFP Photo/Ahmad Gharabli]