Russia's economic development and trade ministry has signed an agreement with Nissan Motor for the construction of the Japanese carmaker's assembly plant in the country.

According to Prime-Tass, Nissan also signed an investment agreement with the St. Petersburg city government on the location of the plant.

The agreements were signed by Nissan CEO Carlos Ghosn, economic development and trade minister German Gref and St. Petersburg governor Valentina Matviyenko.

Matviyenko said that Nissan has chosen St. Petersburg due its closer location to Europe, favourable investment conditions, and supportive business climate.

When fully operational, the plant will employ around 750 people and have an annual production capacity of up to 50,000 vehicles, Gref said. Investments in the construction are expected to total $US200m, the minister said.

Ghosn said that construction of the plant is expected to start in March-May 2007 and production in 2009.

Nissan currently supplies its cars to Russia via its Moscow-based subsidiary Nissan Motor Rus, established in August 2003. It sold 46,485 cars in Russia is 2005, up from 28,436 cars in 2004.