Suspected militants armed with dynamite and machine guns kidnapped three Indian petrochemical workers from their residence in Nigeria's oil capital Port Harcourt on Saturday, the army said.
The gunmen originally seized 10 workers, all employed by Indonesia's Indorama, but soldiers engaged them in a gunfight and rescued seven, an army spokesman in the region said.
A Nigerian driver was killed in the crossfire.
The abduction takes to 15 the number of foreign workers being held in the Niger Delta, a vast wetlands region where all of Nigeria's oil reserves are located.
Violence in the world's eighth largest oil exporter has surged since Feb 2006, shutting down a third of production and prompting thousands of foreigners to flee the lawless delta.
"The militants invaded a block of flats occupied by Indorama with dynamite and heavy machine guns and took 10 workers. The joint task force responded to a distress call and rescued seven. They escaped with three," said spokesman Sagir Musa, adding that troops were still pursuing the abductors.
An Indian Foreign Ministry spokesman said in New Delhi officials were in touch with Nigerian authorities for an early release of the hostages.
Violence in the southern delta is fuelled by widespread resentment against an industry which has extracted billions of dollars from the region but left most people in poverty with little access to power, roads, water, schools and doctors.
About 100 expatriates have been kidnapped so far this year, but most were released after their employers paid ransoms.
Indorama is majority owner of the Eleme petrochemical plant near Port Harcourt, which was privatised in December 2005.
PROVOKED TO ARMS
Four American oil workers abducted off Nigeria's coast last week from a barge operated by US contractor Global Industries said the government must move fast to improve the sordid living conditions in the Niger Delta.
"It hurts to see human beings live the way these people are living in the Niger Delta, no one deserves to live like this ... There is no way they will not be provoked to carry arms and do what they are doing," said one of the hostages, Kevin Faller, in an interview with Nigeria's independent Vanguard newspaper.
"The reason they kidnapped us is to draw the attention of the government and the oil companies to their suffering," said another hostage named Chris Gay. "They want development, which is why we were being held."
The four men said they are in good health but anxious to reunite with their families.
"I want the Nigerian government to bring us out of here to enable me go home to my family," said Mike Roussel.
The Americans were kidnapped a few days after the Movement for the Emancipation of the Niger Delta (MEND), which is spearheading an insurrection in the region, called for a month of "mayhem" before a new government is sworn-in in Nigeria on May 29, after disputed elections last month.
MEND says it is fighting for regional control over the delta's oil wealth, the release of two jailed leaders and $1.5 billion in compensation to villages for decades of oil spills. Militants also see the transition to a new government on May 29 a chance to extract concessions.
But the line between militancy and crime is blurred and most abductions are motivated by copycat groups seeking hefty ransom.
(Additional reporting by Palash Kumar in New Delhi)