(Updates toll, adds details from state agency)

SANAA, May 30 (Reuters) - A gunman angered over a land dispute opened fire outside a village mosque in northern Yemen after Friday prayers, killing at least seven people, the state news agency Saba said.

"It was apparently a lone gunman with a machinegun," a provincial official told Reuters. Saba said police arrested the attacker, who said he acted because of a feud over a plot of land with some relatives.

In addition to the seven killed, Saba said 12 people were wounded, six of them seriously, in Kohal village in Amran province, about 60 km (40 miles) north of the capital Sanaa.

In the south of the country, a small-scale oil producer, three blasts were heard near the refinery in the port city of Aden, but an official said the installation was not damaged.

Yemen, a poor Arab state where many ordinary citizens are armed, has faced unrest over unemployment and rising prices in the south and renewed fighting between government forces and Shi'ite Muslim rebels in the north.

In early May, 15 people were killed and dozens wounded in the bombing of a mosque in the volatile northern city of Saada. Officials blamed the attack on followers of rebel leader Abdul-Malik al-Houthi. The rebels denied involvement.

Yemen, which said this week it had detained 11 suspected al Qaeda militants, joined the U.S. "war on terror" after the Sept. 11, 2001, attacks.

The ancestral home of Osama bin Laden, Yemen is still viewed in the West as a haven for Islamist militants.

It has jailed dozens of militants for involvement in bombings of Western targets and clashes with the authorities. Militants have also attacked oil installations. Al Qaeda's wing in Yemen vowed in January to win the release of its prisoners from the country's jails and to retaliate for the killing of militants by government forces.

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