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UPDATE 1-Russia and Nigeria to sign gas and nuclear deals

Published 06/23/2009, 02:33 PM
Updated 06/23/2009, 02:40 PM

* Series of deals on gas, nuclear energy to be inked

* Gas deal will be Nigeria's biggest with foreign partner

* Planned agreement has divided opinion

(Recasts with Nigerian presidency spokesman)

By Felix Onuah and Randy Fabi

ABUJA, June 23 (Reuters) - Russia and Nigeria are expected to sign a series of deals including a joint venture agreement on gas exploration with Gazprom and a nuclear energy pact during the Russian president's visit to Nigeria on Wednesday.

Nigerian presidency spokesman Segun Adeniyi said four memoranda of understanding would be signed during the visit, including what he described as the biggest gas deal the African country has signed with a foreign partner.

Gazprom said in February it was close to sealing a $2.5 billion oil and gas exploration deal that would create a 50/50 joint venture with the state-run Nigerian National Petroleum Corp (NNPC).

Russian President Dmitry Medvedev travels to Nigeria's capital Abuja on Wednesday to meet with President Umaru Yar'Adua and promote Moscow's economic interests in Africa's most populous country and its biggest oil exporter.

"A number of intergovernmental agreements are expected to be signed after the talks in Abuja, including a document on the founding of a joint venture between Gazprom and Nigeria's NNPC," said a senior Kremlin official, who asked not to be named.

An NNPC official also confirmed the planned signing, but declined to provide details.

Nigeria has the world's seventh-largest proven gas reserves and the Gazprom deal could strengthen Russia's position as a supplier of natural gas to North America and Europe.

Adeniyi said other deals to be signed included an agreement on nuclear energy development and on investment promotion between the two nations.

OPINION DIVIDED

A senior Gazprom source told Reuters in February that 90 percent of the $2.5 billion investment in Nigeria would go towards developing the country's domestic gas production, processing and transportation.

Despite Nigeria's vast gas reserves it has been unable to develop its gas industry to anywhere near full potential because of a lack of funds and regulation.

Some industry experts in Europe see Russia's deals with African OPEC members like Nigeria as an attempt to increase control on Europe's natural gas supplies.

Gazprom, which already provides a quarter of Europe's gas, has in the past said that investing in Nigeria's liquefied natural gas (LNG) makes strategic sense as it is much closer to its main North American market than Russia.

The planned deal has divided opinion in Nigeria.

Some decision makers are keen to send a signal to established foreign partners that they have new rivals, like China and Russia, while others fear Nigeria will be exploited against its interests as part of a bigger geopolitical game.

Yar'Adua has made clear that Nigeria's partners will have to divert a greater proportion of their natural gas output in Nigeria for domestic use over the coming years as it tries to end a crippling power crisis, a major brake on economic growth. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ ) (Additional reporting by Oleg Shchedrov in Cairo; Writing by Nick Tattersall; editing by James Jukwey)

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