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Islamic militants in the Philippines have released a video showing the beheading of a German hostage after they demanded a $820,000 ransom for the man.

Authorities are trying to confirm whether or not Jurgen Gustav Kantner had been killed by the notorious Abu Sayyaf group, the Daily Mail reported.

The brief video was circulated on Monday by the SITE Intelligence Group, which monitors jihadi websites

Kantner on the SITE Intel Group video. Photo / Supplied
Kantner on the SITE Intel Group video. Photo / Supplied

It shows Kantner, 70, sitting in a grassy clearing and saying "Now he kills me" shortly before a masked militant beheads him with a curved knife.

A few gunmen mutter "Allahu Akbar", or "God is great", in the video that lasts a minute and 43 seconds.

The militants had previously threatened to kill him by mid afternoon Sunday if a ransom of 30 million pesos ($820,000) was not paid, Philippine officials said.

The Philippine military said it would not confirm Kantner's death unless it sees the captive's remains or other compelling evidence.

Military spokesman Brig. Gen. Restituto Padilla said he "will not dignify that video by watching it."

"They can shout and claim whatever they want but we will not rely on this," Padilla said, adding an ongoing offensive against the Abu Sayyaf and attempts to rescue foreign and local hostages held by the militants would continue.

He added that the military had received information about infighting within Abu Sayyaf, with some militants preferring to wait for a huge ransom and a more hardline commander demanding that the German be killed as the militants had announced.

In Germany, Foreign Ministry spokesman Martin Schaefer said German experts were evaluating the video to determine whether it was authentic, but that if it was, it's "deeply shocking."

"It makes you question what can lead people to commit such a barbaric crime, but, at the moment, I'm not in a position to say whether the video's authentic," he said.

He would not give any details on possible negotiations with the kidnappers, including whether there was a ransom demand, citing government policy and saying that "public comment never helps in finding a solution" in such cases.

A few gunmen mutter 'Allahu Akbar,' or 'God is great,' in the video that lasts a minute and 43 seconds. Photo / Supplied
A few gunmen mutter 'Allahu Akbar,' or 'God is great,' in the video that lasts a minute and 43 seconds. Photo / Supplied

Abu Sayyaf claimed in November that its gunmen had kidnapped Kantner and killed a woman, believed to be Kantner's wife, Sabine Merz, sailing with him off neighbouring Malaysia's Sabah state.

Villagers later found a dead woman on a yacht with the German flag, off Laparan Island in Sulu province, in the southern Philippines.

Kantner and his partner, Sabine Merz, have been abducted before and were taken hostage by Somali pirates in 2008 but were later freed.

The Abu Sayyaf, which the US and the Philippines have blacklisted as a terrorist organization, is holding more than 20 mostly foreign captives and local hostages in jungle encampments in the country's south.

They beheaded two Canadian men last year after separate ransom deadlines lapsed.
President Rodrigo Duterte's adviser who deals with Muslim rebel groups, Jesus Dureza, has appealed to the Abu Sayyaf to spare their hostages.

Duterte has ordered troops to destroy the Abu Sayyaf extremists, saying their ransom kidnappings were embarrassing and were creating a security alarm in the waters bordering the south, Malaysia and Indonesia.

The three countries have made efforts to jointly shore up security along their busy sea border.