A British oil executive shot dead by Islamic militants in Saudi Arabia was planning to retire and move back to East Sussex.

Work was being carried out on 62-year-old Michael Hamilton's sea-view house in Rye where he and his wife Penelope planned to retire.

The father-of-two was on his way to work at Arab Petroleum Investments Corp (Apicorp) when he was gunned down in his car.

Minutes earlier, he had dropped off his wife at a nearby compound to visit friends. He was fired on as he drove up to his main office gates.

His body was dragged through the streets behind a vehicle for more than a mile before being dumped near a bridge.

Militants in military-style dress opened fire inside two oil industry office compounds - including Mr Hamilton's - in the Gulf city of Khobar on Saturday.

Gunmen later held up to 50 people hostage for 25 hours in a residential compound following the attack at the two oil companies' offices.

The suspected al-Qaida attack on foreigners working in the oil industry left at least 22 people dead before Saudi commandos brought the siege to an end.

Born in Kilmarnock, south-west Scotland, Mr Hamilton had a house at Lavender Walk, Point Hill, Rye, where he lived during his visits to the UK.

He has two grown-up children. Son Charles works as a lawyer in London and daughter Juliette is studying medicine in Australia. Both were yesterday in Khobar comforting their mother. Mr Hamilton was senior manager of the project and trade finance department at Apicorp and had worked for it in Saudi since 1989.

He and his wife lived in one of the compounds reserved for oil workers.

Back in East Sussex, neighbours spoke of their shock.

Restaurateur Derek Bayntun, a near neighbour, described Mr Hamilton as a "quiet, gentle man". He said work was being carried out at the couple's home ahead of their anticipated return.

He said: "It is a nice house and they have been doing a lot of work on it.

"He was obviously committed to his job in Saudi Arabia but presumably had been getting ready for his retirement."

Another neighbour, who did not want to be named, said: "Point Hill is in deep mourning for great friends."

Frances Catt, a friend of Mrs Hamilton's family, said: "It is a very shocking thing. It is a terrible tragedy for Penny because they were looking forward to sharing their retirement together."

She added Mrs Hamilton - who grew up in the area - would visit the house more often but would still spend most of the time in Saudi with her husband.

Britain's ambassador to Saudi Arabia, Sherard Cowper-Coles, warned yesterday another terrorist attack in the kingdom was "probable".

The Foreign Office in London has advised against all but essential travel to Saudi and urged visitors to take great care.