Page last updated at 09:35 GMT, Friday, 18 April 2008 10:35 UK

Russia swaps Libya debt for deals

Libyan leader Muammar Gaddafi (left) with Russian President Vladimir Putin, 17 Apr 08
Libya's Col Gaddafi is no longer an international pariah

Russia has agreed to cancel $4.5bn (2.3bn) of Libyan debt in exchange for major contracts for Russian firms.

The announcement came during a visit to Tripoli on Thursday by the Russian President, Vladimir Putin.

The two countries signed deals on energy co-operation, military assistance and construction of a 500km (310-mile) railway line in Libya.

Libya was a big importer of Soviet weaponry during the Cold War, when it accumulated large debts.

Russia's state gas monopoly Gazprom plans large-scale exploration and production projects with Libya's national energy company. They will include liquefied natural gas installations and gas-fired electricity plants in Libya.

Russia will provide the technology for Libya to build a major rail link between Sirte and Benghazi. Construction is expected to take four years.

Gazprom is also holding preliminary talks with Nigeria about a multibillion-dollar project to deliver Nigerian gas to Europe via a pipeline across the Sahara.

The project is costed at $10bn for the pipeline and $3bn for other installations, delivering up to 30bn cubic metres a year of gas to Europe. The 4,128km (2,580-mile) pipeline from Nigeria will cross Niger and Algeria.

Mr Putin said Libya "is orientated towards the most active co-operation with Russia in all areas".

President Putin is now in Sardinia for talks with Italian Prime Minister-elect Silvio Berlusconi.

The Italian firm Eni is also involved in big energy projects in Libya and already has a close partnership with Gazprom.

Country profile: Libya
04 Apr 08 |  Country profiles
Analysis: Italy woos Libya
08 Oct 04 |  Europe

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