LAGOS Nigeria's biggest construction firm, Julius Berger JUBR.LG, is pulling out of the oil-producing Niger Delta because of the deteriorating security situation there, a senior company executive said on Saturday.
Gunmen kidnapped two Germans working for the firm, the Nigerian unit of German builder Bilfinger Berger (GBFG.DE), on Friday, blowing their armoured vehicle off the road with dynamite and killing a soldier in their convoy.
The ambush by around 15 gunmen on three senior employees, who were traveling in armored jeeps accompanied by 28 soldiers, had been so brutal that there was no alternative but to suspend operations, the company official said.
"The current security environment makes it impossible for us to continue our operations in the Niger Delta and to protect our employees," he told Reuters, asking not to be named for security reasons while staff were being pulled out.
"Since yesterday, we have already stopped at our three major sites," he said.
Friday's attack was the latest on expatriates working in the Niger Delta, the home of Africa's biggest oil industry, which has become notorious for kidnappings and raids on oil sites since militants launched a campaign of sabotage two years ago.
The decision by Julius Berger -- which is listed in Nigeria and 49 percent owned by Bilfinger Berger -- is an embarrassment for the government of President Umaru Yar'Adua, who is under international pressure to end insecurity in the delta.
It will also hamper much-needed development in the region, which Yar'Adua has made one of the cornerstones of his efforts to address the root causes of the unrest.
Among other projects, Julius Berger is rebuilding the main east-west road across the Niger Delta and is one of Nigeria's biggest private sector employers, with more than 16,000 staff.
The company executive said operations in the delta would be suspended "indefinitely." Around 50 expatriates and hundreds of local employees would be affected.
"This is not just for the safety of expatriate staff. It is for everyone, black and white. One of our drivers was shot recently," he said.
The bombing of oil pipelines by militants who say they are pushing for a fairer share of Nigeria's natural wealth has cut the country's oil output by around a fifth since early 2006, helping drive global crude prices to record highs.
Oil firms including Royal Dutch Shell (RDSa.L) and Exxon Mobil (XOM.N) have relocated non-essential staff from the region to the commercial hub Lagos in recent years because of the security concerns.
Armed groups have mushroomed, funding themselves by trading stolen oil and taking advantage of the breakdown of law and order to extort hefty ransoms for kidnapped foreigners, as well as local politicians and businessmen or their relatives.
Yar'Adua has pledged a two-pronged approach, saying he will not tolerate the presence of armed groups but also saying he wants to address the frustrations of impoverished communities by developing local infrastructure.
His government is organizing a long-awaited peace summit but the main militant group, the Movement for the Emancipation of the Niger Delta (MEND), has said it will not attend.
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(Editing by Jon Boyle)