(Adds fresh Libyan statement, paragraphs 7-9) By Carol Giacomo, Diplomatic Correspondent WASHINGTON, March 12 (Reuters) - The United States is close to reaching an agreement with Libya for cooperation on a nuclear medicine center but for now has no plans for the kind of broad nuclear energy development Tripoli has suggested, a U.S. official said on Monday. Libya's official Jana news agency reported earlier on Monday that an agreement between the two countries that would help Libya generate nuclear electricity would be signed shortly. But the U.S. official, in an interview with Reuters, said the Jana report "vastly overstates things." "What we said to the Libyans after they got rid of their nuclear weapons effort (was) we'd be open to talking to them about some aspects of civilian uses of nuclear power," said the official who works on nonproliferation issues and spoke on condition of anonymity. Toward that end, "we talked to them about a nuclear medicine center and we are engaged in serious discussions about our willingness to assist with that project," which would benefit the health of the Libyan people, he said. The Jana report said the U.S.-Libya cooperation would include building a nuclear power plant, helping develop water desalination capacity, joint research and technical projects and training Libyan technicians in the United States. However an official Libyan source later told journalists in Tripoli that Libya was planning to negotiate an agreement with the United States on the peaceful use of nuclear energy. The source made no mention of a planned signing of an accord. "The Libyan government gave the Foreign Ministry an authorisation to enter negotiations with America to reach an agreement related to the peaceful use of nuclear energy in all fields," the official source said. Nuclear medicine uses internally administered radioactive materials, called radioisotopes, to help diagnose and treat a wide variety of diseases. Exact details about the center's cost and specific projects were not immediately available. The U.S. official added that the Bush administration had expected the agreement -- negotiated by the State Department and Department of Energy -- to be signed by Libyan authorities late last week and was surprised when it was not. LIMITED PLANS He said there were no discussions or specific plans to help oil- and gas-exporting Libya develop or benefit from nuclear energy. A State Department deputy spokesman, Tom Casey, told a news briefing, "I'm certainly aware of no plans for the United States to participate in nuclear programs with Libya." Libya in 2003 ended years of international estrangement by accepting responsibility and starting to pay compensation for the bombing of airliners over Scotland and Niger in 1988 and 1989. It also promised to give up nuclear, chemical and biological weapons and has followed through on those promises. But Libyan leader Muammar Gaddafi said at the time he still hoped to develop a nuclear program for peaceful purposes. Washington has voiced hopes that Iran and North Korea will follow Libya's example. On March 3 Gaddafi renewed a recent complaint that Western countries had failed to properly compensate Libya for scrapping its nuclear arms program and as a result countries like Iran and North Korea would not follow his lead. The U.S. official interviewed by Reuters said that nuclear energy cooperation could be explored in the future but is more likely to involve construction of nuclear power-generating plants in neighboring Egypt, a long-time U.S. ally, with the power shared on a grid across country boundaries with Libya. Talk of nuclear energy cooperation is "very premature," he said, adding: "The only thing of any concrete nature that we discussed with the Libyans that I'm aware of is the nuclear medicine center." (Additional reporting by Salah Sarrar in Tripoli)
