Putin targets contracts on Libyan trip

Russian President Vladimir Putin plans to oversee the signing of deals worth more than $10 billion on a trip to Libya aimed at grabbing a slice of a market opening to the world after years of sanctions, his spokesman said.

Mr Putin, who quits on May 7 to become a prime minister to his loyal successor Dmitry Medvedev, arrived in Tripoli yesterday at the start of a two-day visit to the Opec member, officials said. It is the first visit by a Kremlin leader since 1985.

"The main point of the visit is to compensate for losses our bilateral relations suffered during the sanctions, which we observed strictly in contrast with some Western competitors," a Kremlin spokesman, Dmitry Peskov, said.

The former outcast state, whose oil and gas riches earned it more than $40 billion in 2007, is now aggressively courted by Western companies seeking contracts from big state infrastructure projects aimed at modernising Libya's run-down public services.

Visits to Tripoli last year by then British Prime Minister Tony Blair and French President Nicolas Sarkozy and a 2004 trip by then German Chancellor Gerhard Schroeder were crowned with large contracts for their countries' respective companies. Russia's bid is helped by what analysts see as Libyan leader Muammar Gaddafi's desire to balance growing political and economic ties with the West with alternative sources of international support such as Moscow. That offers a limited window of opportunity for Russia, seeking to revive its role as a global power, which diminished after the Soviet Union collapsed.

"Russia plays the role of a foil to the United States, which remains the major power," Alexander Kliment of Eurasia Group consultants said.

Libya's ties to the West have warmed since it abandoned its weapons of mass destruction programmes in 2003, prompting the removal of most international sanctions imposed for what the West called Colonel Gaddafi's support of terrorism.

"Gaddafi once said his love affair with the Soviet Union had failed to materialise in a marriage," one Russian official said. "Perhaps it is time to try a marriage of convenience."

Mr Putin is holding talks with Colonel Gaddafi and is overseeing the signing of a political declaration and an accord on investment guarantees, according to the Russian officials.

Russia's trade with Libya is worth about $200 million a year now, a fraction of the $1 billion in Soviet era exchanges, but energy firms are already laying the basis for further expansion.

In the past two years, energy companies Tatneft and Gazprom have won permits to explore in Libya, which has Africa's biggest oil reserves.

Gazprom expects to receive new gas assets in Libya thanks to a swap agreed earlier this month with its Italian partner ENI.

Among other deals in the offing, Russia's Stroitransgaz company is seeking a contract to build a gas pipeline network on Libya's Mediterranean coast, while Russian railways are close to striking a deal with Libya on constructing a €2.7 million railway in the country, officials say.

Technostroiexport company is negotiating deals to build seven power stations and a high-voltage power line.