At the same time, Russia's state gas monopoly Gazprom also signed a deal to develop six prospective oil and gas fields in Libya.
A Kremlin official, who spoke to the Reuters news agency on condition of anonymity because of the sensitivity of Friday's talks, said that Russia and Libya could co-operate in the peaceful use of nuclear energy, but would not give further details.
He said that negotiations would also focus on prospective Russian arms supplies to Libya, which was a major customer for Soviet weapons during Cold War times, purchasing several hundred combat jets, thousands of tanks and other hardware.
RIA Novosti, Russia's state news agency, reported on Friday that Mikhail Dmitriyev, head of the Russian federal service for military-technical co-operation, had said that Libya has expressed interest in buying aircraft, air defence systems and navy ships.
The Interfax news agency said that a tentative agreement on supplies of Russian weapons worth more than $2bn could be signed during Gaddafi's trip to Moscow.
It said Libya wants to purchase S-300, Tor-M1 and Buk-M1 air defence missile systems, two squadrons of Su-30 and Mig-29 fighter jets, several dozen combat helicopters, tanks, rocket launchers and a diesel submarine.
Interfax said that Russia also plans to sign contracts to modernize aging Soviet-era weapons in Libyan arsenals which lack spare parts.
Military and other ties withered after the Soviet collapse, and Russia is now facing stiff competition from European arms makes who have been courting Libya amid a thaw in Tripoli's relations with the West.
Kommersant, Russia's business daily, said on Friday that Libya has dragged its feet on signing business deals after the debt forgiveness agreement was announced.
|Libya is expected to order several Mig-29 Russian fighter jets [GALLO/GETTY]
It said there that there had been little progress in talks over prospective weapons deals and industrial projects.
It added, however, that Libya may offer Russian ships to use its port of Benghazi, a move that will soothe Russian irritation over a slow pace of progress in weapons talks.
Russia has sought to revive a naval presence in the Mediterranean which it had in Soviet times and has eyed its allies for potential bases.
Moscow faces competition from Ukraine in the Libyan arms market, whose numerous weapons plants could offer cheaper versions of the same Soviet-designed weapons.
Gaddafi may visit Ukraine after his trip to Russia, a visit that could strengthen Libya's hand in bargaining with Russia over the price of weapons.