Nuclear Saudi Arabia a lifeline for the atomic energy industry
DUBAI (Reuters) - Saudi Arabia's atomic energy ambitions are grand enough to grant several reactor vendors multi-billion dollar contracts to keep them busy building in the desert for decades.
The fortunes of nuclear power plant builders around the world sank when a tsunami smashed into Japan's Fukushima nuclear plant in March 2011, sparking the worst nuclear crisis since the Chernobyl disaster.
Opposition to nuclear power has risen since in many countries, along with construction costs, but nuclear technology is gaining popularity in the Middle East, where soaring electricity demand is eating into oil and gas exports.
The United Arab Emirates UAE.L picked a consortium of Korean companies in late 2009 to build the Gulf Arab region's first nuclear power station, dashing French nuclear industry hopes of building the plant near Abu Dhabi.
But state-run French nuclear reactor builders should get something out of Saudi Arabia's much larger nuclear programme, with Riyadh's plans to build up to 17,000 MW one of the world's biggest nuclear building markets for the next two decades.
France's original large fleet of nuclear plants was built around one technology, and there are economies of scale to be enjoyed from building just one type.
But Saudi Arabia is likely to opt to build a variety of different plants to meet its rapidly rising power demand, according to the Vice President of King Abdullah City for Atomic and Renewable Energy (KACARE), which is responsible for steering the kingdom's nuclear plans.
More than one design would avoid over-stretching one reactor builder and allow the kingdom to sign politically potent, long-term contracts with several of its biggest trading partners.
"We see unique benefits of diversifying acquired technologies in terms of job creation, value chain localization, and knowledge transfer," Waleed Abulfaraj said.
"The current front runners are all countries which Saudi Arabia has already signed a nuclear cooperation agreement with, which include France, Korea, China, and Argentina."
Abulfaraj said the kingdom is considering only Generation 3 and 3+ advanced reactors which have already licensed, built and operated safely. Third-generation plants have standardised designs to streamline licensing and cut construction times, added safety features and longer operating lives of around 60 years. The kingdom expects the first to be built by 2022.
Third generation large reactor vendors include Mitsubishi (7011.T), France's Areva (AREVA.PA), Toshiba Corp's (6502.T) Westinghouse, GE Hitachi, and Korea's Kepco (052690.KS).
Saudi Arabia is also keen to use smaller modular reactors at industrial complexes, but will hold off on buying any until there are clearer, global regulations on their use, he said.
Table of reactor plans worldwide:
There are 435 civil nuclear power reactors operating around the world, with 67 under construction. The kingdom's atomic ambitions are modest compared to China's, which is building 29,910 MW and planning another 59,800 MW, according to the World Nuclear Association WNA.L.
India is building 5,300 MW and planning to build at least another 15,100 MW, while Russia is building 9,160 MW and planning another 24,180 MW,
But it is still one of the biggest potential export markets for reactor vendors worldwide over the next two decades, as China builds more of its own plants and Russia always has done so.
"Saudi Arabia has the potential to be an important market for the global nuclear industry," Jonathan Cobb, an analyst at the WNA, an umbrella group nuclear energy companies worldwide.
"Working with a range of vendors does have the advantage of giving countries new to nuclear energy a broader experience of working with key players in the global industry. China has chosen to work with a range of vendors and this has served its ambitious nuclear energy program well."
The Saudi target implies building at least 11 large reactors, or more if a mix of reactors is used, with the largest - France's European Power Reactor EPR.L - capable of producing 1,630 MW.
But it seems Saudi Arabia is set on building more than one type.
"It would surprise me, though it wouldn't be out of the question, if they went with one ... I doubt they would go with five or six ... But it wouldn't surprise me that they would go with two," Sandy Rupprecht, senior vice president business and project development, at Westinghouse said.
Few of the limiting factors on nuclear new build elsewhere - environmental opposition, volatile power market prices, high upfront costs and long construction times - are going to be stumbling blocks in a country trying to save millions of barrels of valuable oil from being burnt in its power plants each summer.
"Saudi Arabia has no problem with something which is the main condition nowadays for developing nuclear power, which is to have the financial capacity to do it," Luis Echavarri, director of the OECD's Nuclear Energy Agency, said.
"If you want to be efficient economically, I think that having a single technology helps a lot... However, if you have two or three different technologies you can negotiate better sometimes because you can benefit from competition even when you are already under construction," he said, adding that the Saudi programme was probably big enough to justify two reactor types.
(Additional reporting by Angus McDowall in Riyadh, editing by William Hardy)
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