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Russia to Pursue Energy Deals in Africa

Dmitry Medvedev,
Russian President
23 June 2009 – Russian President Dmitry Medvedev is to visit four Africa countries in order to boost Russia’s global influence and contest with China and the U.S. for control of energy and resources.

Medvedev’s trip, the first to Africa by a Russian head of state in more than three years, comes amid a diplomatic offensive that saw the president host three summits in three days last week, including the first meeting of leaders from the so-called BRIC countries. Medvedev will meet his U.S. counterpart Barack Obama in Moscow next month before attending the Group of Eight summit in Italy.

Energy is likely to dominate Medvedev’s visits to Egypt, Nigeria and Angola, as Russia, the world’s largest energy supplier, seeks allies among other producers. Companies including OAO Gazprom, OAO Rosneft, OAO Lukoil and OAO Novatek either have active projects in the three countries or seek to break into these markets, according to the Economy Ministry.

Rosneft, Russia’s largest oil company, seeks to expand in Africa and will pursue joint projects with Italy’s Eni SpA.

Angola currently holds the OPEC presidency, while another member of the cartel, Nigeria, is Africa’s biggest oil producer, with reserves of more than 30 billion barrels. Russia, which isn’t an OPEC member, was the world’s largest oil producer in April after Saudi Arabia cut output in line with a cartel decision.

Russia, Egypt and Nigeria are members of the Gas Exporting Countries Forum, an organization set up by 15 states to coordinate forecasts, investments and relations with consumers to defend their market interests amid volatile energy prices.

Nigeria in April selected 15 companies, including Gazprom, to participate in its natural-gas development plan aimed at satisfying local and foreign demand. Nigeria, which has the world’s seventh-largest gas reserves at 187 trillion cubic feet, plans to spend $30 billion building domestic processing and transmission facilities to send gas across the Sahara Desert by pipeline to Europe.

Novatek, Russia’s second-biggest gas producer, has exploration rights for an offshore gas field in Alarish in Egypt and said in May it would start drilling in the first quarter of next year.

Energy Minister Sergei Shmatko, Sergei Kiriyenko, chief executive officer of Rosatom Corp., and Sergei Vybornov, CEO of Russia’s diamond monopoly ZAO Alrosa, will also travel with Medvedev.

Kiriyenko will accompany the president to Egypt and Nigeria, the first two stops on his tour as they plan to take part in the tender for constructing nuclear reactors in Egypt.

Russia and Egypt signed an accord on nuclear power cooperation in March that allowed Russian companies to bid for reactor construction contracts.

Medvedev is expected to sign an agreement with Nigeria to allow commercial deals in the nuclear industry between the two countries. Russia is mainly interested in participating in Nigeria’s uranium industry.

Alrosa’s Vybornov will accompany Medvedev to Namibia and Angola, the last two stops on his trip. In Angola, where it has operated since 1990, Alrosa has stakes in two joint mining ventures, Catoca and LUO-Camatchia-Camagico, and has said it will explore for diamonds, oil and gas as well as build hydropower plants. Given the global crisis, the company plans to focus on existing projects, such as Catoca.

The president’s visit to Nigeria, Namibia and Angola are the first by a post-Soviet Russian head of state. Medvedev’s predecessor Vladimir Putin, now prime minister, visited Egypt as president in 2005. One year later, Putin traveled to South Africa.