Nigeria's main militant group waging an "oil war" against the government has declared a 60-day truce after the release of its leader Henry Okah under an amnesty deal.

"Effective, 0000 hours (2300 gmt) Wednesday July 15, 2009, the Movement for the Emancipation of the Niger Delta (MEND) will be observing a temporary ceasefire for a 60 day period," the group said in a statement.

A day before Okah's release on Monday, the MEND took its "oil war" into Lagos, killing at least five people in its first ever attack on Africa's biggest city while sabotaging an oil depot in the harbour area.

It said the decision to lay down arms was driven by several factors including the release of Okah after nearly two years in jail following an unconditional state pardon and the dropping of treason charges.

Okah, 45, a marine engineer was arrested in Angola in September 2007 for arms trafficking.

MEND said Okah's release was "a step towards genuine peace and prosperity if Nigeria is open to frank talks and deals sincerely with the root issues" of the militancy in one of Africa's top oil producers.

It said during the ceasefire, it will establish negotiating teams to talk to the government over its demands.

But a key pre-condition for the negotiations will be the withdrawal of an elite government security team from the oil-rich Niger Delta, where MEND has staged several attacks and kidnappings.

"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 statement said.

Violence in the southern region of the world's eight largest oil exporter has cut output by more than 30 percent over the past three-and-a-half years.

Apart from attacks on oil installations in the Niger Delta, hundreds of oil workers -- foreign and local -- have been kidnapped.

The rebels launched their offensive in the swamps and creeks of oil-rich southern Nigeria in 2006, demanding that local people get a fairer share of the oil wealth.