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Libya, Russia Draft Stronger Energy Ties

MOSCOW -- Libya sought to strengthen energy ties with Russia, an alliance that could raise alarms in Europe where countries had looked to Libya to help ease their dependence on Russian oil.

"We would like to achieve bigger volumes in investment cooperation between Russia and Libya in the oil and gas sectors," Libyan Prime Minister al-Baghdadi Ali al-Mahmudi said at the start of talks with his Russian counterpart, Vladimir Putin.

The Libyan prime minister said after the talks he had discussed the possibility of Russian cooperation in building a nuclear power station in Libya, Russian news agencies reported.

Putin said Libya was also seeking to buy Russian weapons.

"The Libyan leadership has confirmed it is interested in buying high-quality produce from Russia's military-industrial complex," Putin was quoted as saying by local news agencies.

Libya, a major oil and gas exporter, has become an attractive market for both Russia and the West since 2003, when the UN Security Council lifted sanctions against the country viewed for decades as a supporter of terrorism.

Putin, then the Russian president, visited Libya in April to ensure favorable treatment for Russian firms vying with Western and Chinese rivals.

Moscow then agreed to write off $4.5 billion of Libya's debt in return for contracts going to Russian firms.

Libyan leader Muammar Qaddafi, keen to balance growing ties with the West, used the April summit to stress special relations with Moscow.

On July 31, Putin said: "We will do everything to create favorable conditions for Libyan investment in Russia. We will also work in the oil and gas sector not only in Libya, but in other third countries."

Al-Mahmudi invited Putin to visit Libya again in late August to attend an opening ceremony of a railway built by Russian Railways, under a 2.2 billion-euro ($3.4 billion) contract.

Improving Ties

In a separate signal of improving ties, an executive of Russian oil company LUKoil detained in Libya since November was flown back to Moscow on al-Mahmudi's plane.

Aleksandr Tsygankov spent eight months in detention without being formally charged. Russian media has speculated he was detained on suspicion of involvement in industrial espionage.

"Yesterday, on the orders of the leader of the Libyan revolution Qaddafi, a decision was made to free...the LUKoil official," al-Mahmudi said, according to a transcript of the meeting supplied by the Russian government. "He was flown to Moscow on our special flight."

During the Tripoli summit, Russia's gas-export monopoly, Gazprom, showed interest in taking part in the construction of a new gas pipeline linking Libya and Europe.

Libya currently exports about 8 billion cubic meters of natural gas per year to southern Sicily via the Greenstream pipeline owned equally by Italian oil major Eni and Libya's National Oil Corporation.

Gazprom and Eni formed a strategic partnership in 2006, which allowed for energy asset swaps, including those Eni has in Libya. The two have said the deal could also involve pipelines.

Libya's natural-gas reserves are estimated at 1.47 trillion cubic meters, though the National Oil Corporation said they could be more than twice as large.

Gazprom is also interested in buying additional volumes of Libyan oil and gas and eyeing a refining joint venture in Libya.

Its plans will dampen European hopes of finding alternative sources of gas to lessen dependence on Russia.

Al-Mahmudi said Libya was planning to open an office in Moscow of its investment agency and hailed energy cooperation as a new era in bilateral relations.