REFILE-UPDATE 3-Yemen says kills deputy regional head of al Qaeda
* Seen as most important militant freed from Guantanamo
* Conflicting accounts on how alleged militant died
* Washington sees AQAP as most dangerous al Qaeda wing
ADEN/WASHINGTON, Sept 10 (Reuters) - A Saudi national freed by U.S. authorities from detention at Guantanamo Bay, Cuba, who then became second-in-command of Al Qaeda in the Arabian Peninsula, or AQAP, was killed in Yemen, a Yemeni government website said.
The Yemeni Ministry of Defense website said Said al-Shehri was killed on Monday, along with six other militants, in what it called a "qualitative operation" by Yemen's army in the remote Hadramout province in eastern Yemen. It gave no further details.
There were conflicting reports on how Shehri died. A Yemeni security source said Shehri was killed in an operation last Wednesday in the Hadramout that was thought to have been carried out by a U.S. drone, rather than the Yemeni military.
The source said another Saudi and an Iraqi national were among the others killed. U.S. officials declined to comment on whether a drone strike had occurred.
U.S. officials described Shehri as one of the most important al Qaeda-linked militants to be released from the Guantanamo detention facility, where he was taken in January 2002 after being handed over by Pakistan to U.S. authorities.
A former officer in Saudi Arabia's internal security force, Shehri allegedly joined al Qaeda and helped to facilitate the movements of Saudi militants seeking to travel to Afghanistan via Iran, according to a classified Pentagon report made public by WikiLeaks.
According to the Pentagon document, Shehri was "assessed to be a HIGH risk" prisoner because "he is likely to pose a threat to the U.S., its interests and allies."
A U.S. official familiar with the case said Shehri was one of numerous Saudi militants at Guantanamo released by the administration of President George W. Bush under heavy pressure from Saudi authorities and the U.S. court system.
Shehri was released to Saudi Arabia in 2007 and put through a Saudi rehabilitation program for militants.
But he later returned to the battlefield in Yemen, and became AQAP's number two, leading one U.S. official to characterize him as a "poster child for recidivism." Shehri was wanted by Yemeni authorities for a suspected role in a U.S. embassy attack in 2008.
AQAP, which has planned attacks on international targets including airliners, is described by Washington, which has repeatedly used unmanned drones to target its members, as perhaps al Qaeda's most dangerous and innovative affiliate.
Residents of the Wadi al-Ain district where last Wednesday's drone attack occurred said they believed from their contacts with Islamist fighters in the area that Shehri had died then, when missiles struck a house where they were meeting.
"There was a group of people from the Ansar al-Sharia group who were holding a meeting - Shehri was one of them and there were foreigners there too," said Elwi Suleiman. Ansar al-Sharia is one of a number of Yemeni militant groups linked to al Qaeda.
There was no immediate explanation for the discrepancy in the accounts given by Yemeni authorities and locals.
LAWLESSNESS ALARMS ALLIES
Yemen's government is trying to re-establish order after an uprising pushed out veteran ruler Ali Abdullah Saleh in February, but faces threats from Islamist militants, southern secessionists and a Shi'ite rebel movement in the north.
Protests and factional fighting have allowed AQAP to seize swathes of south Yemen, and Shi'ite Muslim Houthi rebels to carve out their own domain in the north.
The lawlessness has alarmed the United States and Yemen's neighbor Saudi Arabia, the top world oil exporter, which view the impoverished state as a new front line in their war on al Qaeda and its affiliates.
Washington backed a military offensive in May to recapture areas of Abyan province. Militants struck back with a series of bombings and assassinations.
A southern Yemeni politician who returned from exile survived an assassination attempt on Monday, a security source said. Last week, 10 civilians were killed in an apparent drone attack that missed its target or was based on wrong information.
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