LAGOS - Three foreign oil workers, two Americans and a Briton, were freed on Monday after being held hostage by militants in Nigeria for five weeks, a U.S. diplomatic source said.

The three, employees of U.S. oil services company Willbros, were seized from a barge in the southern Niger Delta on February 18 during a wave of attacks in the world's eighth largest oil exporting country that has cut shipments by a quarter.

"They are all in good health," the source told Reuters, asking not to be named.

The rebel Movement for the Emancipation of the Niger Delta had demanded a greater share of the delta's oil wealth, the release of two jailed leaders from the region and compensation for oil pollution as conditions for freeing the hostages.

It was not immediately clear what produced the breakthrough in talks with the kidnappers, but President Olusegun Obasanjo is due to fly to Washington on Tuesday and pressure had been building up for an end to the standoff over the hostages.

Militants, often armed and funded with the proceeds of crude oil theft, roam the mangrove-lined waterways of the delta in speedboats and many areas are off-limits for security forces who have lost control of the region.

The majority of people in the delta have seen few benefits from decades of oil extraction that has yielded billions of dollars in profits for foreign oil companies and corrupt politicians. Authorities often dismiss militants as thieves.

Vast areas of the delta are not connected to the national power grid. There is no clean water in many places. There are almost no roads. Teachers and doctors are in short supply.

The environment has been wrecked by oil spills and the 24-hour burning of gas associated with the extraction of oil.

Mnay analysts say Nigerian governments, during almost three decades of military dictatorship as well as during periods of civilian rule, have seen it as being in their interests to control the oil by keeping the delta poor, divided and insecure.