DUBAI (Reuters) - Saudi security forces shot dead a wanted man in eastern Saudi Arabia on Wednesday, a local newspaper reported, after gunmen tried to stop redevelopment work at the old quarter of Awamiya, where authorities say Shi’ite militants are hiding.

Residents and activists said that several people were injured during clashes between security forces who had entered the old part of the town known as al-Musawara (the walled part) backed by bulldozers.

Mira al-Jazeera, an online newspaper that often reflects Shi’ite views, said at least two people were confirmed killed in the raid, which began at dawn, and that dozens were injured.

Saudi officials were not immediately available to comment.

The mainstream al-Hayat newspaper quoted sources as saying that gunmen attacked workers who were trying to start to tear down al-Musawara as part of redevelopment plans and security forces killed a wanted man.

It gave no details on the identity of the man.

Authorities say the narrow streets of the old town known as al-Musawara, which date back more than 200 years, have become a hideout for Shi’ite Muslim militants believed to be behind attacks on security forces in the majority-Shi’ite oil-producing region.

Awamiya has long been a flashpoint of friction between the Sunni-led government and Shi’ites complaining of discrimination. Tensions have increased since Nimr al-Nimr, a prominent Shi’ite cleric convicted of inciting violence, was executed a year ago.

Details of casualties in the clashes were sketchy.

Activists posted pictures and video recordings of bulldozers on a street, cars on fire and walls covered in bullet-holes, and said security forces in armored vehicles were preventing medics reaching the area.

It was not immediately possible to verify the pictures or the recordings, or Mirat al-Jazeera’s report.

“A citizen was confirmed martyred as well as another of Indian nationality after being shot by Saudi army gunfire,” the online newspaper reported on its Facebook page.

In a subsequent statement, an activist said the expatriate was from Bangladesh.

Saudi media have published government plans to tear down al-Musawara, built during Ottoman rule more than 200 years ago, to flush out militants who it says are using its narrow streets to escape arrest.

Authorities accuse the militants of mounting a wave of attacks on security forces and a campaign of intimidation against local Shi’ites whom they accuse of cooperating with Saudi authorities.

Saudi media have reported attacks on local officials, and the kidnapping of a Shi’ite judge last December.

In January, the Arabic-language newspaper Okaz reported that the governor of Qatif province had estimated compensation payments for 488 houses to be demolished inside the old town would amount to 764 million riyals ($204 million).

Residents say many inhabitants have refused to accept compensation, demanding instead that authorities help renovate crumbling structures rather that destroy them.

In place of al-Musawara, authorities say they will build an attractive district of shopping centers, office buildings, green spaces and fountains.

(This story has been refiled to fix dropped word in paragraph five)