Chevron has said it had restored about 100,000 b/d of Escravos production and it continues to ramp up output from its 250,000 b/d Agbami field.

This bodes well for Nigeria's oil production expansion targets in the near term but the country may still have its work cut out simply holding on to its current oil production capacity in the long term.

Nigeria hopes to raise production to 4 million b/d in the next decade, but analysts say it is unlikely to reach even half that figure in the year ahead.

Any increments in production capacity will almost certainly arise from deepwater offshore fields, unaffected by years of unrest and growing maturity but international oil companies (IOCs) already appear to be treading cautiously with investment plans.

Nigeria's lower OPEC production target level--1.7 million b/d according to Platts calculations, OPEC having declined to publish individual quotas under the current 24.845 million b/d target for 11 members--also appears to be constraining IOC investment decisions for more expensive projects.

Excluding current shut-in production, the Paris-based International Energy Agency estimates Nigeria's output capacity at 2.46 million b/d by 2014.

The lower capacity picture largely reflects delays in agreeing time frames for expansion of some of Nigeria's ultra-deepwater field developments, some of which are running at least three years behind original planned targets

Amnesty seen as success so far

President Umaru Yar'Adua's amnesty offer, which ended on October 4, signals the type of bold strategy that is needed if Nigeria's government is going to make any real progress to end the long-simmering crisis in the southern oil patch.

Up to 15,000 gunmen have surrendered their arms and accepted Yar'Adua's unconditional pardon and there are signs that the period of relative calm has allowed Nigeria to increase output.

Moreover, Yar'Adua's investment plans to jump-start development projects in the region appear to show a sincerity on the part of the government to address the core issues at the heart of the Niger Delta crises.

Must find ways to steady decline

Nigeria, which for long had remained Africa's leading oil producer, recently lost that distinction to Angola and must find ways to end the steady decline in its oil production.

Encouraged by the successful disarmament of the Niger Delta militias, the government has increased pressure on the National Assembly to pass the stalled Petroleum Industry Bill before the end of the year.

While efforts to inject greater accountability and transparency in the energy sector have been welcomed, the multinationals fear the tough fiscal terms in the legislation will making Nigeria one of the least investor-friendly countries in the world.

Concerns over tough fiscal regime

They say the aggregate impact of multiple taxes, high royalties and loss of incentives under the bill will have a significant negative impact on investments.

Analysts say IOCs operating are not inclined to plow several more billions into new oil and gas projects when the fiscal terms under the new PIB will make some of those future investments uneconomic.

This poses a problem at a time when new investment in the critical hydrocarbon sector has already been threatened by the security crisis in the delta.

And despite government expectations that Asian companies are grappling to invest billions of dollars in Nigeria's energy sector, there is as yet no evidence that any Asian player is willing to replace the investment gap left by the IOCs.

In reality, Asian companies have secured little more than a handful of blocks out of several hundred awarded over the past 50 years to the IOCs and western independents, and not a single barrel of oil has yet been produced by them.