While dozens of foreign and Nigerian oil workers have been taken hostage in the troubled region this year, the Briton was the first foreign oil worker to be killed in such clashes, in which some 60 Nigerian officers have died.
"During the attempt by Nigerian military marines to free the seven hostages on the FPSO Mystras, gunfire was exchanged during which a hostage was killed while six others, one of whom was wounded, were freed and are safe," the Italian oil firm said on its website.
Britain's Foreign Ministry late Wednesday confirmed that the hostage killed was a British national. The injured hostage was identified as Italian, the ANSA news agency reported, citing the foreign ministry in Rome.
The oil company earlier identified the kidnapped workers as one Italian, one Briton, a Filipino, two Finns, a Pole and a Romanian.
In Lagos, Nigerian police, who had confirmed the kidnapping, denied all knowledge of the rescue attempt or of casualties.
But a spokesman for the Movement for the Emancipation of Niger Delta (MEND), an armed group which has in the past claimed responsibility for other abductions and attacks on oil installations and workers said: "I have just learnt that the hostage-takers ran into a naval patrol and in the exchange, the Nigerian military killed one of the expatriate hostages and severely injured another."
The MEND spokesman, who declined to give his name, said the hostages "were abandoned in the exchange by the kidnappers who had insufficient ammunition and only four rifles."
He said the hostages who survived are now in the hands of Saipem, the Eni subsidiary whose vessel was attacked.
Nigeria, the world's sixth oil producer, accounts for some 2.6 million barrels of crude in daily exports, but recent unrest in the Niger Delta has cut back output by a quarter.
Eni, in a statement earlier Wednesday, said the seven were seized when "ten armed men attacked the vessel Mystras, stationed on the Okono field offshore from Port Harcourt" in southern Rivers state.
Nigerian national police spokesman Haz Iwendi said the incident occurred between 2:00 am (0100 GMT) and 4:00 am (0300 GMT) some 60 nautical miles from Bonny in Rivers State.
A western diplomat told AFP that 83 crew members were on board the vessel when it was attacked and that the assailants "picked seven of them".
Iwendi told AFP that the assailants, who numbered about a dozen, identified themselves as "Egbesu Boys" (the name of a local armed gang).
The Mystras was operated jointly by Saipem, Eni's construction and engineering arm, and a second company identified only as SBM, Eni said.
No group has so far formally claimed responsibility for the attack.
The Niger Delta has seen a resurgence in violence since the beginning of the year, with armed groups stepping up attacks on oil installations and personnel.
The groups, who frequently kidnap foreign oil workers, say they are seeking a larger share of the country's oil wealth and jobs for the local community.
Since the start of the year, dozens of local and foreign workers have been kidnapped and released after spending days or even weeks in captivity, while around 60 security personnel have been killed during confrontations with the militants.
Some of the oil companies targeted are known to have paid large amounts for the release of hostages, but none has ever publicly admitted to doing so.
Wednesday's incident comes barely three days after militants vacated an oil pumping station operated by Agip on Sunday after a two-week siege, freeing some 30 workers and soldiers.
Gunmen had occupied Agip's Tebidaba flowstation in Bayelsa state on November 6, but officials said no expatriate workers were involved in the attack. The company was forced to shut down operation at the facility because of the seizure, losing around 50,000 barrels of crude in daily output.

Copyright AFP (Agence France-Presse), 2006