By Dan Isaacs BBC, Lagos

Nigeria's President Olusegun Obasanjo has called for firm action by security forces to bring to an end civil unrest in the country's oil-rich southern delta region.

The violence has severely curtailed Nigeria's crude oil production and is causing increasing concern on world markets, already destabilised because of the war in Iraq.

Villagers accuse troops of firing on villages

The crisis in the delta erupted earlier this month, with militant youths from the Ijaw community targeting oil installations and rival local communities.

They are demanding an increased share of oil revenues and greater political representation ahead of next month's elections.

Many thousands of refugees have now fled their villages in the rivers and creeks of the Niger Delta.

Soldiers on patrol

Dozens of others are believed to have died in clashes between the two rival communities, the Ijaw and the Itsekiri.

Soldiers are now patrolling aboard navy gunboats and a strict curfew is in place.

Obasanjo is seeking re-election in April

There are alarming reports from those fleeing the area of security forces firing indiscriminately into villages, causing deaths and injuries to unarmed civilians.

But there is no independent confirmation of this and the army has firmly denied such actions.

Nigeria is the world's sixth largest oil exporter. A cut of 40% in production as a result of the unrest is a major loss to world markets, particularly as the oil, high quality light crude, is very much in demand.

But an early resumption in output is unlikely as the situation remains very unstable.

Situation worsen

The oil companies whose facilities have been directly targeted by the militants have evacuated their staff and ceased all operations in the affected areas.

The total loss in output now stands at over 800,000 barrels per day.

This is not only of serious consequence to the multinationals - Shell, Chevron Texaco and Total Fina Elf, but also to Nigeria's domestic consumption.

A major refinery in the nearby oil town of Warri, one of only four in the country, has been shut down because supplies to it have been suspended.

Even before this crisis in the Delta, Nigerians were experiencing serious shortages of fuel for transport, with long queues at petrol stations across the country.

That situation now looks set to get much worse and with national elections just a few weeks away, President Obasanjo will be under great pressure to resolve the unrest in the Delta well before polling day.