By Felix Onuah and Camillus Eboh

ABUJA, Sept 18 (Reuters) - Thousands of Nigerians gatheredin Abuja on Saturday to hear President Goodluck Jonathanproclaim his candidacy in January elections, likely to be themost fiercely contested since the end of military rule.

Jonathan, who has already said on his Facebook page that hewill run in the election, may have all the advantages ofincumbency but his bid faces resistance from some parts of thenorth and risks splitting the ruling party.

There has been an unspoken agreement in the People'sDemocratic Party (PDP) since Nigeria's return to democracy 11years ago that power alternates every two terms between northand south, a rhythm which Jonathan's bid is set to disrupt.

Jonathan, who is from the Niger Delta in the south,inherited the presidency when late president Umaru Yar'Adua, anortherner, died this year during his first term, and some PDPpowerbrokers say the next leader must be a northerner.

The ruling party, which is due to hold primaries inmid-October, has recognised Jonathan's constitutional right torun and supporters say that since he was on a joint ticket withYar'Adua, he can seek to serve out at least that second term.

"It is his intention to spend only four years, the remainingYar'Adua term," Jonathan's campaign director Dalhatu Tafida toldreporters on the eve of the rally in Abuja, but added thatpolitics was not about individuals.

"For now we should give him four years and see how heperforms and then decide whether he can continue," he said.

Thousands of Jonathan's supporters carrying banners andchanting "PDP, PDP" converged on Eagle Square, a major paradeground in the capital Abuja where former military ruler IbrahimBabangida launched a rival election campaign on Wednesday.

Recent policy announcements from Jonathan's administrationhave sounded like campaign pledges, from privatising the powersector in a bid to end chronic electricity shortages to strictermanagement of oil savings through a sovereign wealth fund.

He said in Wednesday's statement on his Facebook page thathe had already delivered on reducing fuel shortages, provided abailout package for the troubled textile industry and helpedprotect bank deposits with a state asset management company.

But it is powerful northerners within the PDP, rather thanjust the voting public, whom he will need to convince.

FIERCE BATTLE AHEAD

The PDP nominee has won all three presidential races sincethe end of military rule in 1999, making the outcome of pastelections a foregone conclusion and bringing Africa's mostpopulous nation close to being a one-party state.

But the presidential race this time is more contentious,with no consensus PDP candidate and no obvious "godfather" --the powerful background figures who have in the past hand-pickedthe nominee -- holding sway over the party.

Babangida, a northerner who seized power in the OPEC memberin August 1985 and ruled for nearly eight years, also wants thePDP ticket and is hoping northerners opposed to Jonathan willrally behind him. He has vowed he would serve only one term.

But Babangida too is a divisive figure. He was forced frompower after cancelling an election that was generally regardedas fair, and this colours his political reputation.

He faces other northern challengers within the PDP includingformer vice president Atiku Abubakar, who switched to the rulingparty after running unsuccessfully for president as theopposition Action Congress candidate in the last vote in 2007.

Kwara state governor Bukola Saraki and national securityadviser Aliyu Gusau could also win northern backing if theydecide to seek the PDP nomination, analysts say.

The threat to Jonathan from the northern factions depends ontheir ability to unite behind a single candidate. ShouldBabangida, Abubakar, Saraki and Gusau all push their campaignsto the finish line, they may fail to do so. (For more Reuters Africa coverage and to have your say on thetop issues, visit: http://af.reuters.com/ ) (Writing by Nick Tattersall; editing by Ralph Boulton)