Nigeria's most prominent militant group on Wednesday declared a 60-day ceasefire in its offensive against Africa's biggest oil industry to provide a chance for peace talks with the government.

The Movement for the Emancipation of the Niger Delta (MEND), responsible for attacks that have cut around 300,000 barrels per day of Nigeria's oil output since May, said its decision was also a goodwill gesture for the release of rebel leader Henry Okah on Monday.

"Hopefully, the ceasefire period will create an enabling environment for progressive dialogue," MEND said in a statement.

Colonel Rabe Abubakar, spokesman for the military task force, welcomed the announcement and said the army would maintain its ceasefire during the government's amnesty period.

The ceasefire had little impact on global oil prices as traders were skeptical that peace could be restored in the Niger Delta after years of conflict.

"Until we see more oil actually coming out of Nigeria, it shouldn't have too much of an impact on Nigerian crude oil prices," an oil trader with a European major said.

Reflecting the fragility of the ceasefire, MEND threatened on Wednesday to resume its offensive after it said seven navy gunboats were headed to one of its camps. But the military denied any attack plans.

MILITANT DEMANDS

MEND has demanded the military withdraw from certain areas of the Niger Delta before negotiations could commence.

"A compulsory prelude to talks is the withdrawal of the military Joint Task Forces from the Gbaramatu communities and the return of all the displaced persons back to their various homes," the militant group said.

Analysts said any peace talks will be difficult because Niger Delta militants will demand the federal government's property rights to land where oil firms are currently operating.

But the government relies on Niger Delta oil income for more than 90 percent of its revenues and splits the oil profits with the 36 Nigerian states.

"Their struggle is principally about land," said Miabiye Kuromiema, chief executive officer of Port Harcourt-based Southernfields Development Partners. "The land should not be owned by (state-run oil firm) NNPC or the federal government. It should go back to the people."

Kuromiema warned that if the peace talks fail, the violence in the Niger Delta could get "exponentially" worse.

MEND's attacks have forced Royal Dutch Shell, U.S. oil major Chevron and Italy's Agip to cut around 300,000 barrels per day in the last six weeks and has helped support global oil prices.

President Umaru Yar'Adua has offered a 60-day amnesty program to all gunmen in the Niger Delta in the hopes of halting the violence, which has cost the country billions of dollars in lost oil income.

Okah was the first senior militant to accept the clemency and was released on Monday after being in detention for more than a year on gun-running and treason charges.

The rebel leader, who denies being the leader of MEND, told Reuters on Tuesday he didn't think other militants would take the amnesty, which requires individuals to give up their arms and participate in a federal program to reintegrate them into society.