Contrary to Nigeria's National aspiration to attain a production capacity of 4.0 million barrels of crude oil per day (4.0 mbd) by next year, the production capacity is forecast to hit 2.9 million b/d by 2014.

The figure forecast by the International Energy Agency (IEA) which monitors the market for the fuel consuming industrialized nations contrasts with optimism by the Department of Petroleum Resources (DPR) that the country has developed products capacity of over 3.0 million barrels per day.

Both agency's however agree that the country's production is on steady rise as oil firmsz take advantage of the amnesty deal between the government and the militant groups that terrorize oil firms to return to site and drive fast production recovery.

According to estimates by the IEA, Nigeria's crude oil output rose to the highest level in 15 months and accounted for around 60 percent of OPEC's increase in November after a government's amnesty deal halted attacks on oil facilities.

IEA said Nigeria's production rose 80,000 b/d, to just under two million barrels per day (b/d) in November, as companies stepped up the pace of repair work to damaged oil infrastructure with the ceasefire agreement holding.

The amnesty, which expired on October 4, has been more successful than the Nigerian government anticipated with up to 15,000 gunmen surrendering their arms.

The deal holds the promise of a significantly improved operating environment for IOCs after years of attacks on the country's oil production infrastructure, the agency said in its latest monthly report.

Nigeria could bring back on stream up to 600,000 b/d of of shut-in production next year.

For the 2008 to 2014 forecast period, Nigeria's production capacity has been revised higher by 386,000 b/d from the June report, with output levels now expected to increase by 370,000 b/d versus a previous decline of 20,000 b/d, the Paris-based agency said.

Before the ceasefire, Nigerian production fell to the lowest level in more than two decades in August but output is on track to breach the two million b/d mark in December.

The medium-term outlook critically hinges on the government's success in rehabilitating the former militants and improving the living conditions in the Niger Delta region. A previous at attempt at disarmament under President Umaru Yar'Adua's predecessor Olusegun Obasanjo in 2004 broke down as militants squabbled over the money paid for their weapons.

This time, however, the government has significantly increased spending in the oil-producing Niger Delta, earmarking roughly $1.3 billion for post-amnesty development projects, including building roads, schools and hospitals as well as proposing to allocate 10 percent of revenues from its oil joint ventures to residents in the region.

The administration has also enlisted support from companies operating in the country.

In tandem with government officials, Shell launched training programs in November for former militants. The European Union and South Korea, among others, have also offered financial assistance to provide training and build infrastructure for the impoverished region, the agency said.

While the prospect for securing peace with rebel groups looks more promising than at any time in the past, Nigeria's controversial Petroleum Industry Bill may yet derail production capacity expansion plans.

Nigerian lawmakers are pushing forward with plans to pass legislation a decade in the making aimed at divesting the state-owned NNPC of the regulatory role in order to transform it into more of a profit-making organization capable of meeting funding commitments with its joint venture partners.

At the same time, the proposed legislation would allow the government to renegotiate old contracts, including offshore oil production contracts from the 1993 bid round, and impose higher royalties and taxes.

"Negotiations are ongoing and we assume for our forecast that a positive outcome for the government and companies will prevail, allowing stalled capacity expansion plans to move forward," the IEA said.

Meanwhile, Angolan production was 25 percent above its implied target of 1.5 million b/d above its quota in November.

The agency said that new projects also underline Angolan growth from 1.9 million b/d to 2.5 million b/d.

OPEC's newest member continues to argue its output target allocation in place since September 2008 is too low.

Angola's less-than-stellar compliance level may prove awkward at OPEC's 22 December meeting taking place in the country's capital, the agency said.

The country's oil minister and OPEC president this year, Jose Botelho de Vasconcelos, admitted in the latest edition of state-owned Sonangol's Universo magazine that Angola is exceeding its OPEC target and has said Angola needs a higher production level to fund its own post-war reconstruction, which it is funding through oil revenues.

In 2008, Angola briefly overtook Nigeria as Africa's largest oil producer when it pumped more than 2 million b/d.