January 26, 2006

Nigeria hostage talks making progress – Obasanjo

DAVOS, Switzerland (Reuters) - Nigeria's President Olusegun Obasanjo said on Thursday that contacts with the kidnappers of four foreign oil workers were making progress, and played down the impact of the crisis on oil investment.

"Oh, we are very much in contact with them," Obasanjo said of the militant group which seized the oil workers on January 11.

"Immediately after it happened, we set up a committee ... It's not only in contact, it's making progress."

The four oil workers were kidnapped from a Royal Dutch Shell

oilfield by militants demanding the release of ethnic Ijaw leaders and compensation to delta villages for oil pollution.

The crisis has forced Shell to withdraw 500 staff and cut its output by 221,000 barrels a day, or one tenth of Nigerian exports, putting upward pressure on world oil prices.

Asked if he was concerned about the impact on oil investment, Obasanjo told Reuters at the World Economic Forum in Switzerland: "Not really."

He declined to comment when asked if he believed the crisis would be ended by negotiation or by force.

He said the kidnapping was part of a broader separate problem of "criminality" in the region.

"There are two situations, if you like. There's the immediate situation of the hostages, and we have to get the hostages released, and then there's the situation of criminality in the Niger Delta, that's a different issue altogether," Obasanjo told Reuters Television at Davos.

The army this week deployed more troops to key oil installations after armed men stormed the headquarters of Italian oil firm Agip in Nigeria, killing eight policemen and a civilian. Agip is a unit of Italy's ENI.