Armed groups, such as the Movement for the Emancipation of the Niger Delta (Mend), say they are fighting for a greater share of the region's resources.

But YarAdua said his administration had been providing "full funds" to the region. 

Rebels' rejection

Mend, which also demands  the demilitarisation of the delta, basic services for local communities, the release of jailed activists and compensation for oil pollution, dismissed YarAdua's offer.

"Mend will not lay down its arms because of a mere verbal statement from Mr YarAdua"

Movement for the Emancipation of the
Niger delta statement

"Mend will not lay down its arms because of a mere verbal statement from Mr YarAdua," it said in an email to the Reuters news agency.
   
"It will only be considered under a well co-ordinated peace arrangement, under the supervision of a respected international mediator."

YarAdua said the national security council - including the chief of defence staff, the defence, interior and foreign ministers and other senior security officials - would meet next week to work out "new rules of engagement" in the Niger delta.

Unrest has forced oil giants such as Royal Dutch Shell, ExxonMobil and Chevron to move all but their most essential foreign staff out of the region, while the drop in output has eaten into Nigeria's foreign earnings.

Although Nigeria is the world's eight largest oil exporter, more than 70 per cent of the population lives on less than $1 a day and one-third of people live below the poverty line.

A briefing by the US Council on Foreign Relations in 2006 said few Nigerians have benefited since oil exploration began in the 1970s because the distribution of revenues has been undermined by corruption and mismanagement.