Mend says it is campaigning for a better share of the oil wealth
The Nigerian military has confirmed that a major pipeline in the country's oil-rich Niger Delta has been blown up.
But it denied a militant claim that it had lost 11 troops during the attack.
The Movement for the Emancipation of the Niger Delta (Mend) group said in an email that it had attacked the Royal Dutch Shell pipeline in Rivers State.
The militants, who want a greater share of oil revenues for the area, said they blew up a flow station and were retreating when soldiers opened fire.
A Shell spokesman told the AFP news agency the militants had hit the main pipeline in the area and the company had to stop the flow in order to contain the spill.
Nigeria is the world's eighth largest oil exporter and the largest in Africa.
Since 2006 Mend has waged a campaign of sabotage on oil infrastructure that has seen oil production cut by a fifth.
Nigerian Oil Minister Odein Ajumogobia told Nigerian television 175,000 barrels per day of oil production shut in by recent militant attacks would be restored in the coming weeks, but added almost half a million more remained affected by the insecurity.
Nigerian President Umaru Yar'Adua, who is nearing the end of his first year in office, had said that addressing the problems in the Niger Delta - where there is widespread poverty - was one of his priorities.
A military spokesman has strongly denied any troops were killed in the attack.
"It is not only a lie, but it is dubious bunkum," Lt Col Sagir Musa said in a statement read to the BBC.
He confirmed that the important oil pipeline had been blown up, but he said there were no soldiers in the area at the time of the explosion.
"The flow station is not guarded by any armed men. How and where did they get the soldiers they claim to have killed?" the statement said.
Mend claims their fighters killed the soldiers in a firefight and then sank the boat the soldiers were in.
"Today's attack is dedicated to the administration of Umaru Yar'Adua and [Vice-President] Goodluck Jonathan who have failed after one year in office to ensure peace, security and reconciliation in the Niger Delta region," the Mend email said.
Mend say they are campaigning for a better share of the oil wealth, but correspondents say many of the attacks on pipelines are carried out by criminal gangs for extortion.