(Adds police confirmation, background) By Austin Ekeinde PORT HARCOURT, Nigeria, Feb 18 (Reuters) - Kidnappers in Nigeria's oil-producing Niger Delta have released an American engineer and his Nigerian driver held captive since Jan. 23, authorities said on Sunday. Gunmen had seized the two hostages, together with a Briton, on their way to work in the delta's main city of Port Harcourt, where there has been a spate of kidnappings this year. The Briton was released on Feb. 7 on health grounds. "They were released at 10 last night. They are in hospital," said a source at the men's employer, Nigerian construction company Pivot. The police commissioner of Rivers state, where Port Harcourt is located, confirmed the release. "I spoke to the American on the phone and he told me he was in good health," Felix Ogbaudu said. He said he did not know the terms of the two men's release. Most hostages in the Niger Delta are freed after their companies or local government officials pay ransoms. The release leaves six foreign hostages in the hands of militant and criminal groups in the delta, where violence surged last year and has intensified since the start of 2007. At one time in January, 38 foreigners were being held by different groups across the delta. Nigeria is Africa's biggest oil producer but output has fallen by a fifth following militant attacks on oil facilities and some major investments are being delayed by the violence. Thousands of foreign oil workers have already left the delta in the past year as attacks and kidnappings have become a weekly occurrence. Poverty and a collapse of basic public services due to corruption in government fuel militancy and crime in the delta, where many residents resent the oil industry because it has brought few benefits to them. Many fear the situation in the delta could further deteriorate between now and Nigeria's elections in April as local politicians sponsor armed thugs to intimidate opponents and voters. Some militias in the delta have attacked oil facilities or seized hostages to press political demands such as greater local control over oil revenues or the release of jailed leaders from the region. But the lines between militancy and crime are blurred, with many armed groups taking advantage of the security forces' inability to control the delta to make money from kidnappings and smuggling stolen crude. (Additional reporting by Tom Ashby in Lagos and Estelle Shirbon in Abuja)
