Nigerian militants today broke off talks over the release of four kidnapped western oil workers who have been held for 16 days on the Niger delta.

A message from the kidnappers stated bluntly that the government was failing to respond to its demands for a $1.5 billion ransom from the Shell oil company which employed the men, and the release of two local ethnic leaders held by the Nigerian authorities.

"Those guys are not going anywhere. The Nigerian Government still fails to understand that this is different," said a statement from an e-mail account which has previously been used by the kidnap gang.

"They will not be released for any reason other than that specified in all our statements. We are not discusing with anyone for a while. This is in reaction to the Nigerian Government’s non-appreciation of the situation at hand," it added.

Today Nigerian security sources released the first photo of the four hostages to be seen since their kidnap, showing Nigel Watson-Clark, a British security expert, Harry Ebanks, a Honduran engineer, Patrick Landry, a US boat skipper, and their Bulgarian colleague Milko Nichev.

The four were kidnapped on January 11 by heavily armed ethnic Ijaw militants who stormed their supply vessel, the Liberty Service, as it worked in the EA offshore oilfield for the energy giant Shell off the delta coast.

The picture is thought to be at least four days old. It shows the men sitting on plastic chairs in a palm oil grove guarded by three Nigerian guerrilla fighters, one of whom is equipped with an assault rifle.

The men appear to be uninjured. Three are wearing the shorts and polo shirt combination favoured by westerners working in the field, while Nichev sports blue overalls. All four have a bottle of orange liquid at their feet.

Various e-mailed statements identify the hostage-takers as hardline elements of the 14-million-strong Ijaw ethnic group seeking to seize control of the oil resources lying under their land in the delta region.

The gang has demanded the huge ransom from Shell to compensate Ijaw communities polluted by the oil industry. A series of attacks on oil facilities over the past two weeks has killed at least 22 members of the security forces and three Nigerian oil workers, and shut down more than eight percent of the country’s oil production.

In the southern city of Yenagoa, a ramshackle boom town surrounded on three sides by the winding creeks of the Niger Delta, government spokesman Ekiyor Welson continued to predict a rapid end to the hostage drama.

"The hostages are safe. We’re almost getting there. The negotiators have been able to make an agreement and very soon they will be released," he claimed.

Since the kidnapping, armed gangs have blown up a major oil pipeline and attacked two oil facilities, killing a total of 22 police and soldiers and three Nigerian oil workers. It is not clear if the attacks are linked.

Shell has cut production by 221,000 barrels since the start of the crisis and has warned that tankers arriving to pick up crude at its Forcados export terminal might have to wait for up to two weeks to load.

Oil prices today surged past $67 for the second time since the start of the crisis, after the militants threatened more attacks on foreign workers.

Nigeria is Africa’s biggest oil exporter, producing 2.6 million barrels of highly prized sweet light crude per day, and accounting for ten percent of the United States’ oil imports.

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