(Adds start of war games) By Tom Ashby ABUJA, Jan 23 (Reuters) - Gunmen demanding a ransom kidnapped two engineers -- one American and one British -- on their way to work on Tuesday in Nigeria's southern oil city Port Harcourt, authorities said. The abduction brings to 29 the number of foreign workers held by armed groups in the remote swamps of the Niger Delta, Africa's oil heartland, where militancy is on the rise. "They were taken by armed men from their car on the way to work and from there straight to the waterside and into the swamps," an oil industry source said, asking not to be identified. Diplomats said the two men worked for local construction firm Pivot. Police earlier identified both men as American. Another security source said the kidnappers demanded 1.5 billion naira ($11.7 million) for their release. Thousands of foreign oil workers have left the delta in the past year as attacks and kidnappings have multiplied, and some industry executives see the situation descending into anarchy as landmark Nigerian elections approach in April. Nigeria is the world's eighth largest oil exporter, but militant raids last year have cut oil exports by a fifth. Poverty and corruption fuel militancy and crime in the delta's neglected communities, where many feel cheated of the oil wealth produced by their land. German shipping line Baco-Liner said militants who seized one of its cargo vessels on its way to Warri port in Delta State on Saturday had taken hostage all 24 Filipino crew members. Local government officials said earlier only six Filipinos had been abducted from the ship, in a remote tributary in the vast delta of the River Niger. NO CONTACT Baco-Liner Managing Director Klaus Steffen told Reuters he had not spoken to the crew and assumed that the vessel and all 24 crew members were being held. "We have had no contact with the crew so I cannot confirm if they are still on board," Steffen said by telephone from the German town of Duisburg. Government officials say the Filipinos' kidnappers have demanded the release of two jailed leaders from the Niger Delta, and that talks have begun. Militant sources said they were also demanding a change in the ruling party's candidate for Delta State governor in elections in April. The April elections should mark Nigeria's first fully democratic transition and many expect politicians to arm thugs to gain sway at the polls, especially in the delta where elected office comes with a slice of oil revenue. The Nigerian Navy began a four-day exercise on Tuesday around its delta oilfields involving 13 warships, four smaller boats and three helicopter gunships. A senior oil industry executive said he believed the war-games signalled a build-up in forces to confront militants, whose well-planned speed boat attacks have exposed serious flaws in Nigeria's security apparatus. Another militant group is still holding three foreign oil workers -- two Italians and one Lebanese -- after abducting them from an oil export terminal on Dec. 7. That group is also demanding the release of two jailed delta leaders, as well as compensation for decades of oil pollution of delta villages and regional control over oil wealth. (Lagos newsroom tel: +234 1 463 0257; e-mail: thomas.ashby@reuters.com; editing by Andrew Dobbie))
