YENAGOA, Nigeria, Aug 12 (Reuters) - A foreign hostage has died of illness in the oil-producing Niger Delta in southern Nigeria, a source in the Bayelsa state government said on Sunday.

The source had no details on the illness, the circumstances of the hostage's death or his nationality, but said the body was at a hospital morgue in Yenagoa, the Bayelsa state capital.

Abductions for ransom are common in the Niger Delta and at least five foreigners are being held by various armed groups in the anarchic wetlands region. More than 200 have been taken hostage since early 2006 and most have been released unharmed.

Hostages are usually kept in camps in remote locations accessible only by boat through a maze of mangrove-lined creeks and swamps. Some have reported suffering from stomach ailments or malaria during their time in captivity.

Two hostages, one Briton and one Nigerian, were killed in crossfire last year during botched attempts by the military to rescue them, but there are no incidents on record of kidnappers deliberately killing their captives.

Violence in the impoverished delta escalated in early 2006 when armed rebels demanding control over oil revenues started blowing up pipelines and oil wells, cutting Nigerian output by at least a fifth and at times up to a third.

The disruption in supplies from the world's eighth biggest exporter have been a factor in record high oil prices.

But the violence in the delta degenerated from politically motivated attacks to an uncontrollable crime wave. Almost all abductions are for ransom and money changes hands in most cases.

Gang wars, armed robberies and indiscriminate shootings have all risen to the point that much of the Niger Delta, including its largest city Port Harcourt, are no-go areas for most Nigerians.

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