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. Last Updated: 07/27/2016

Deals With Libya Could Top $10Bln

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 up to the world after years of sanctions, his spokesman said.

Putin shook hands with with Libyan leader Moammar Gadhafi in front of his former central Tripoli home, which has been kept in ruins since it was bombed by U.S. aircraft in 1986.

The raid marked one of the lowest points in the decades the North African OPEC member spent being seen as an outlaw state that supported terrorism.

"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," 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 modernizing Libya's rundown public services.

Putin was to hold talks with Gadhafi at a dinner Wednesday and on Thursday and oversee the signing of a political declaration and an accord on investment guarantees, Russian officials said.

Russia's bid for lucrative contracts is helped by what analysts see as Gadhafi's desire to balance growing political and economic ties with the West with alternative sources of international support.

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," said Alexander Kliment, of Eurasia Group.

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

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

Russia's trade with Libya is worth about $200 million per 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, 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 on earlier this month with its Italian partner Eni.

Gazprom CEO Alexei Miller is accompanying Putin and will hold talks Thursday, a company spokesman said by phone Wednesday. Finance Minister Alexei Kudrin is also going, a ministry spokeswoman said, while Kommersant reported that Foreign Minister Sergei Lavrov would also make the trip.

Also accompanying Putin are Rosoboronexport chief executive Anatoly Isaikin and Russian Railways president Vladimir Yakunin, as both state-run giants seek to seal major deals with Libya, Russian media reported.

The deals could include a wide range of arms, including missile-defense systems, fighter jets, helicopters and submarines worth more than $2.5 billion, and would be based on a similar deal brokered with Algeria in 2006 that involved arms sales in return for writing off Soviet-era debt, Interfax said.

One obstacle in the arms-for-debt talks could be radically different estimates of how much Libya owes. While Moscow is pitching for more than $4 billion, Libyan officials have put the total at closer to $2 billion, Kommersant said.

Libya has demanded compensation for weapons it sent to Russia for repairs in the early 1990s that were never returned because of the imposition of international sanctions. While Libya values the weapons at $500 million, the Russian military has valued the weapons at just $1 million, saying they have long been obsolete, Kommersant reported.

Among other deals in the offing, Stroitransgaz is seeking a contract to build a gas pipeline network on Libya's Mediterranean coast, while Russian Railways, or RZD, is close to striking a deal with Libya on constructing a railway in the country, officials say.

An RZD spokesman confirmed Wednesday that Yakunin would be discussing infrastructure projects in Libya. He did not give any details of possible contracts. Technostroiexport is negotiating to build seven power stations and a high-voltage power line.