LAGOS: Nigeria's main armed group in the oil-rich Niger Delta, MEND, declared Sunday an "indefinite ceasefire" to encourage dialogue with the government.

The Movement for the Emancipation of the Niger Delta said in a statement it made its decision after the government "expressed its readiness to engage in serious and meaningful dialogue with every group or individual towards achieving a lasting peace in the Niger Delta."

MEND's attacks on Nigeria's oil industry have helped play havoc with oil prices on the world market and brought down the country's oil production by a third since 2006. Nigeria is the world's eighth-largest oil producer.

The group said it has put together a team to discuss its demands with the government, including Nigerian Nobel literature laureate Wole Soyinka.

A key demand from MEND is that local communities must benefit from the region's oil wealth.

The ceasefire announcement came six days after President Umaru Yar'Adua met for the first time with MEND leader Henry Okah.

The presidency described last Monday's talks as "fruitful", and it emerged on the day of the meeting that the government plans to plough an extra 10 percent of the money it makes from Niger Delta oil back into the region.

Okah on Friday urged the rebels, who have shunned a recent government amnesty, to give dialogue a chance.

In a bid to halt the violence in this OPEC member, the administration in Abuja offered unconditional pardon to armed activists who laid down their arms and said it was open to dialogue.

It also freed Okah in July after two years in jail for high treason and arms trafficking.

In response to the amnesty offer, which ended earlier this month, MEND had declared a truce which lasted four months and expired last week.

Currently the nine oil-producing states in southern Nigeria get 13 percent of the oil revenue.

The most sophisticated and daring of the militants operating in the region, MEND fighters had refused to lay down arms, calling the government's recent amnesty deal a "charade" which failed to address the key issues of under-development and injustice in the delta.

In the volatile Delta region, hundreds of oil workers, including dozens of foreigners, have been targets of kidnapping by MEND and other groups. They have attacked pipelines and offshore facilities and even Lagos harbour.

Although there is no precise death toll, several hundred fighters and civilians have been killed in the region since 2006.

In the past three years Nigeria's oil output has been cut from 2.6 million barrels a day to around 1.7 million currently. It has now been equalled by Angola as Africa's top exporter.

And in the last year, Nigeria has also seen its foreign exchange reserves drop from more than 67 billion dollars to 40 billion.