This should be paradise. A land of plenty. The finest schools and hospitals, gleaming infrastructure that shames the West, a place where wealth literally oozes out of the marshy undergrowth.

This was the dream, anyhow. To say it has turned into a nightmare doesn't do justice to the horror that the Niger Delta has become; it doesn't even begin to describe just how disastrous the discovery of oil more than 50 years ago has been for the people who live here.

A sweaty, heaving melting pot of 30 million people from 40-odd ethnic groups speaking more than 200 different languages, the Niger Delta lies on the southern banks of Nigeria, Africa's most populous country.

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But while we have been using their oil to drive our cars, fuel our aeroplanes, and keep the wheels of our economy turning, those in the Delta have had their land, their lives, their dreams destroyed.

Oil spills have polluted their rivers and land, making fishing and farming impossible. Flares, burning constantly, have filled their air with soot. Billions of dollars have been pumped out of their land with nothing in return. Even the jobs the oil industry promised have gone elsewhere, to well-paid foreigners and Nigerians from less marginalised parts of the country. For those who live closest to the oil fields, the best they can hope for is casual labour: when there is a spill or a pipeline bursts, locals are employed for pennies to clear it up.

Oil has polluted the Delta beyond recognition. But it has also polluted the country's politics. When the first discovery was made in the late 1950s, Nigeria was on the cusp of gaining independence from Britain. The potential oil revenues were seen by many as the perfect launchpad for an independent Nigeria. It hasn't worked out that way. Instead, it has become the perfect launchpad for corrupt politicians and businessmen to enrich themselves at the expense of their people.

It is a dirty business. Oil in the Gulf of Guinea, which snakes its way along the coast of West Africa from Ivory Coast down to Angola, is cheap and plentiful – and until April, Nigeria was Africa's largest oil producer, producing more than 2.5m barrels per day. That

number is falling though, as the Delta has become chaotic, a place of armed gangs, of kidnappings, of daily violence. Oil companies, and the people who work for them, have become the target. In the past few years, shadowy militant groups like the Movement for the Emancipation of the Niger Delta (Mend) have taken advantage of rising anger towards the oil industry. They kidnap foreign oil workers and attack oil installations. Almost all of those kidnapped are returned unharmed once a hefty ransom has been paid. The oil companies and the Nigerian government always insist that no money has changed hands – but no one believes them.

For the oil firms, a seven-figure ransom is a small price to pay to keep on producing. At five cents a barrel, getting oil out of the ground is 10 times cheaper in Nigeria than in Saudi Arabia. But the cost of doing business in Nigeria is getting higher. Mend's attacks on oil installations, including one on a Shell offshore field in June, have cut the country's oil production by at least 20 per cent. As a result, Angola has now overtaken Nigeria as Africa's largest oil producer.

Mend claim they are fighting for a fair share of oil revenues to be spent on the Delta. But nothing is straightforward. The militant groups may like to portray themselves as rebels fighting on behalf of the people, but many of them are little more than guns-for-hire, taking advantage of the chaos. Sometimes they work for gang bosses, sometimes politicians, but the result is always the same. The ransom ends up in some overseas bank account and those living in the Delta get poorer.

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Those same accounts are also regularly feathered with money made from "bunkering" – stealing oil direct from the pipeline and selling it on the black market.

The stability or otherwise of the Delta matters a great deal, even to those who have never heard of it. Within a decade, the United States expects to extract around a quarter of its oil from the Gulf of Guinea. They see it as a safer option than the Middle East, and it has played a large part in the thinking behind the establishment of the US's Africa Command – a plan for a series of permanent military bases on the continent.

Britain, one of the largest investors in Nigeria, is also worried. Gordon Brown has offered to help President Umaru Yar'Adua deal with the "lawlessness", as he puts it. British military aid is on the table.

Yar'Adua became president in April 2007. He would say he was elected, but few who witnessed the poll would describe it as democracy. Once in office, Yar'Adua declared the Delta his biggest priority but little, if anything, has really changed. War has been declared on the militants, but when many of those militants have such close links to senior government officials and wealthy pro-government businessmen, it makes any form of military solution almost impossible.

The Delta is crying out for a comprehensive political solution, one that would bring real investment to a region starved for so long. But oil doesn't seem to work like that. Look across the Gulf of Guinea. Nowhere has oil brought peace, security and development. It has brought wealth for a few and misery for the rest. On paper, Equatorial Guinea is one of the richest countries in Africa. In reality, the money is controlled by one man, President Obiang Nguema, a dictator who "won" 97 per cent of the vote last time he bothered asking. The situation is similar in Gabon, where oil revenues have kept a dictator in power for more than 40 years.

The only potential bright spot is Ghana, a relatively stable democracy which has just found oil. Few people celebrated when the discovery was announced though. They looked nervously across at Nigeria and wondered what they were letting themselves in for.

'Curse of the Black Gold: 50 Years of Oil in the Niger Delta', edited by Michael Watts, photographs by Ed Kashi, published by Powerhouse Books, £27.99