Security is expected to be tight for the formal flag-exchanging ceremony in Bakassi, a peninsula of mangrove islands in the Gulf of Guinea, due to threats of attacks from local armed groups opposed to the transfer.

Despite the security concerns and a court order to delay the handover, Nigerian President Umaru Yar'Adua has insisted it will follow through on its international commitments.

"We want to use this handover occasion to celebrate the goodness of our people, the capacity of our government to honour commitments from government to government, and also to celebrate the friendship between two countries," Nigeria Foreign Affairs Minister Ojo Madueke told Reuters last week.

The two African nations have agreed to work together to explore offshore oil reserves in Bakassi, an area largely untapped because of the border dispute.

With its proximity to the Niger Delta, heart of Nigeria's oil production, industry experts believe the peninsula could hold significant amounts of oil deposits that would help boost Cameroon's declining production of around 90,000 barrels per day.

Nigeria, Cameroon and the United Nations are expected to send senior delegations to mark Thursday's handover, which comes six years after the World Court ruled that Cameroon was the rightful owner of Bakassi. Nigeria and Cameroon almost went to war over the peninsula in 1981.

The Nigerian government agreed to transfer Bakassi two years ago in line with a 2002 World Court order, but sporadic gun battles, political disputes and legal skirmishes have delayed it. About 50 people have been killed in border fighting in the last year.

DISGRUNTLED NEIGHBOURS

A little-known armed Nigerian group launched two attacks on Cameroonian soldiers in Bakassi last month and has promised more violence in the region.

"The Nigerian government can go ahead and handover Bakassi to Cameroon on Thursday if they want, but for us that will not change anything on the ground," said Commander Ebi Dari, spokesman for the Niger Delta Defence and Security Council.

"Our forces will remain on the ground and mount more attacks," he said.

Around 90 percent of the population in the Bakassi peninsula are Nigerian fishermen and their families.

A Nigerian court ordered authorities two weeks ago not to handover Bakassi until it had dealt with a lawsuit filed by community leaders.

"I believe that if we really have a country and a government that respects the rule of law, (Yar'Adua) should respect the high court order. If they have any misgivings about it, then they should go on and appeal," said Kayode Fasitere, an attorney representing the Bakassi community.

The International Court of Justice gave Bakassi to Cameroon, based largely on a 1913 treaty between former colonial powers Britain and Germany.