(Adds quotes from news conference)

By David Brunnstrom

BRUSSELS, Feb 27 (Reuters) - The European Union executive on Wednesday proposed launching talks on closer political and economic ties with Libya this year as part of a drive to boost relations with key energy suppliers.

A framework proposed by the European Commission includes provision for a free trade agreement and cooperation in areas including energy, control of illegal migration, transport, education, environment and culture.

"This is a historic decision. Libya is an important player in the Mediterranean region and in Africa," EU External Relations Commissioner Benita Ferrero-Waldner said.

"I am confident that the agreement will create solid and long lasting relations," she said in a statement.

Trade Commissioner Peter Mandelson said the EU aimed for an "ambitious" free trade agreement.

"Together with our support for Libya's bid to join the World Trade Organisation, these negotiations represent a vital first push forward in Libya's re-integration into the world trading system," he said in the statement.

EU ties with Libya were stalled for years over charges that the Libyan government supported terrorism. But Brussels announced in July it would boost relations after Tripoli freed Bulgarian medics accused of infecting Libyan children with HIV.

In the deal struck to secure the liberation of the medics, the EU held out the prospect of increased market access for Libya in fisheries and agricultural products, as well as cooperation on migration and tourism.

ENERGY SECURITY

Europe takes the bulk of Libya's oil exports and European firms are keen to expand energy investment there. The EU also wants Libya to help in sea patrols aimed at stemming a flood of illegal migrants from Africa.

A Commission mandate to negotiate with Libya has to be approved by the EU's 27 member states. Ferrero-Waldner told a news briefing she hoped it would be approved as soon as possible and said negotiations could be concluded in 12-18 months, depending on Libya's approach.

She said security of energy supplies was a primary EU objective. "We in the European Union are interested in stabilising the supply sources and also in Libya to have a stable and transparent regulatory framework," she said.

She said the European Union would not insist on the negotiations being conducted under the EU's so-called Barcelona Process, which Libya has appeared reluctant to embrace given requirements for political and economic liberalisation.

But asked whether the EU would be rewarding a country accused of rights violations and backing terrorism, she said an essential clause of the framework would cover human rights.

"The Libyans have said they are aware of that and in principle they agree," she said. "From our preliminary contacts, Libya is ready for really discussing these questions of human rights, democracy."

The EU statement said the Commission would aim to "establish fruitful dialogue and cooperation" on political issues "including important subjects such as international security, development and human rights".

The return of the medics to Bulgaria ended what critics called a human rights scandal and allowed long-isolated Libya to complete a process of normalising ties with the West. (Reporting by David Brunnstrom; editing by Andrew Roche)

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