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FM AMEMBASSY ABUJA
TO SECSTATE WASHDC IMMEDIATE 7142

C O N F I D E N T I A L ABUJA 001820 
 
SIPDIS 
 
DEPT FOR INR/OPS 
 
E.O. 12958: DECL: 10/01/2034 
TAGS: PINR BBSR ECON EINV NI
SUBJECT: (SBU) NIGERIA: RUSSIAN BUSINESS PRESENCE IN AFRICA 
RESPONSE(C-CI9-01825) 
 
REF: A. STATE 88241 
 ¶B. ABUJA 1171 
 
Classified By: Charge Dundas McCullough for reasons 1.4.(C). 
 
IS THERE A RUSSIAN TRADE REPRESENTATION IN YOUR COUNTRY? 
--------------------------------------------- ---------- 
 
¶1. (SBU) The Russian Government, through its local Embassy 
representatives, is engaged with the Nigerian government on economic 
issues, such as nuclear energy, oil and gas, electric power, and 
aluminum smelting. 
 
¶2. (SBU) Six agreements and Memoranda of Understanding (MOU) were 
signed during Russian President Dmitry Medvedev's visit to Nigeria. 
The agreements and MOUs were developed to boost the strategic 
partnership between the two nations.  This was the first Russian 
presidential visit to Nigeria.  The agreements and MOUs are in the 
areas of energy, metallurgy, oil and gas production and space 
exploration.  Local press reporting on the presidential meeting 
included the pledge to increase the trade and economic cooperation 
between the two countries as well an effort to encourage contacts 
between Nigerian and Russian institutions, agencies, and companies. 
The six agreements and MOUs include the following areas: 
--Transfer of persons sentenced to imprisonment, investment promotion 
and protection of agreement (IPPA); 
--Cooperation in the field of nuclear energy for peaceful purposes; 
--Legal cooperation between the Nigerian and Russian Ministries of 
Justice; 
--MOU for cooperation of exploration of outer space for peaceful 
purposes; and 
--MOU and Articles of Association on a joint venture between the 
Nigerian National Petroleum Company (NNPC) and GAZPROM. 
 
WHAT MAJOR RUSSIAN COMPANIES OPERATE IN YOUR COUNTRY 
AND IN WHAT BUSINESS SECTORS? 
--------------------------------------------- ------- 
 
¶3. (SBU) Russian company Gazprom is owned by the state and private 
sector investors.  Gazprom and Nigerian state-owned oil company NNPC 
signed an agreement on June 25, 2008, to establish a joint venture 
(JV) on a parity basis.  The JV is intended for executing large-scale 
projects in hydrocarbon exploration, production and transportation; 
construction and engineering of an associated domestic gas gathering 
and processing system; and building power generation facilities.  The 
JV's total projected investment is $2.5 billion.  (Note: Gazprom will 
target the domestic market first by assisting with the development of 
a gas collection infrastructure.  Gazprom will then build the first 
segment of a gas pipeline from southwestern Nigeria northwards.  It 
will then focus on exports, including the use of the EU-supported 
Trans-Saharan pipeline, should it be realized.  NNPC may have trouble 
funding its share of the projected investment as it has a poor track 
record meeting its existing joint venture investment commitments with 
international oil companies (IOC) such as ExxonMobil, Chevron, Shell, 
and Total.  These IOCs have a history of providing billions of 
dollars in bridge financing to plug NNPC-caused funding gaps in their 
respective JV companies.  End Note.) 
 
¶4. (SBU) United Company RUSAL (UC RUSAL) acquired a majority stake in 
the Aluminum Smelter Company of Nigeria (ALSCON) following the 
company's privatization in 2007.  UC RUSAL took advantage of the most 
recent global commodities boom to expand its aluminum production 
capacity but the company is currently facing difficulties due to the 
impact of the global economic crisis.  The Nigeria National Council 
on Privatization is investigating the acquisition and might recommend 
the termination of UC RUSAL's business presence in Nigeria due to 
controversies over UC RUSAL's takeover of ALSCON and its failure to 
Qcontroversies over UC RUSAL's takeover of ALSCON and its failure to 
meet the terms of the privatization agreement. (Note: U.S. BFI Group 
continues to challenge the sale of ALSCON to RUSAL, as BFI offered 
$410 million versus RUSAL's winning offer of $205 million in June 
¶2004. End Note.) 
 
HOW MUCH REVENUE ARE RUSSIAN COMPANIES BRINGING IN? 
--------------------------------------------- ------ 
 
¶5. (SBU) The value of bilateral trade between Russia and Nigeria is 
less than $300 million per year.  Exports from Russia to Nigeria have 
grown from $75 million in 2003 to $282 million in 2008.  Exports from 
Nigeria to Russia are trivial -- a mere $6.7 million in 2008. 
Metal-roll and home appliances were the lead Russian exports to 
Nigeria.  There is a reported effort by the Russia-Nigeria Business 
Council to set up assembly plants in Nigeria where the currently 
imported machinery could be assembled in Nigeria.  This would have 
the benefit of creating jobs and capacity in the manufacturing 
sector.  Nigeria exported a small amount of raw agriculture products 
to Russia in 2008, including sesame seeds ($3.1 million), cashew nuts 
($84,000) and ginger ($74,000).  Oil and gas represents 95 percent of 
the dollar value of Nigeria's total exports.  Bilateral trade is 
thereby limited both by the fact that neither country needs the 
other's oil and gas and the fact that Nigeria has little to export 
aside from that. 
 
 
HOW MUCH RUSSIAN INVESTMENT IS OCCURRING; 
IN WHAT SECTORS; IS IT GROWING? 
---------------------------------------- 
 
¶6. (C) Most Russian investment in Nigeria is in the energy sector, 
specifically gas.  If realized the planned large-scale projects would 
bring total investment into the billions of U.S. dollars, as noted by 
the number of signed agreements, specifically in the oil and gas 
sector (Reftel B). 
 
¶7. (C) Russia is also investing in the agricultural sector by 
supplying tractors to boost agricultural production.  The Russian 
government is reportedly willing to help Nigeria develop, but only 
through investment, not direct assistance. 
 
IS YOUR COUNTRY ACTIVELY SEEKING RUSSIAN 
INVESTMENT AND/OR RUSSIAN TOURISM? 
---------------------------------------- 
 
¶8. (SBU) Nigeria is seeking Russian investment.  Russia and Nigeria 
signed an agreement to cooperate in the construction of nuclear 
reactors and in the exploration for uranium in March 2009. In 
addition Gazprom signed an MOU with the New Nigeria Development 
Company (NNDC) to explore three oil blocks in the Chad Basin and 
Benue Trough in northern Nigeria.  The NNDC is a venture owned by 
Nigeria's 19 northern states.  These agreements predated President 
Medvedev's visit and the signing of six agreements and MOUs in June. 
 
ROUGHLY HOW MANY RUSSIAN CITIZENS RESIDE 
IN YOUR COUNTRY? 
---------------------------------------- 
 
¶9. (SBU) This information is unavailable due to the lack of census 
data.  Locally-based Russian businessmen have told Embassy officers 
that there is no significant Russian community in Nigeria. 
 
¶10. (U) This cable was coordinated with ConGen Lagos. 
 
MCCULLOUGH