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Oil Report

INTERVIEW-Vattenfall getting past nuclear mishaps-CEO

STOCKHOLM, Feb 7 (Reuters) - Utility Vattenfall is putting a string of nuclear mishaps behind it and sees a bright future for atomic power in Europe, although it cannot yet say when its hobbled German plants will be back online.

“You should be a little humble and not overconfident but we have taken a lot of measures and we are definitely on the right track to be the benchmark of our industry,” Lars Josefsson, chief executive of the Swedish state-owned firm, told Reuters.

“In a philosophical sense, of course, you have to stay on your toes whenever you run a nuclear plant.”

Vattenfall has suffered from a run of incidents of varying severity at facilities in Germany and Sweden, starting with an emergency shutdown at its majority-owned Forsmark plant north of Stockholm in 2006.

The company has since made sweeping changes in management and procedure, including the appointment last month of Per-Olof Waessman to the new post of chief nuclear officer.

The future of nuclear power is a topic of hot debate all over Europe, including in Germany, with advocates waving its green credentials and detractors warning of the potential for accidents and difficulties with waste disposal.

Josefsson said he believed the benefits of atomic power meant its future was assured.

“I think there’s a good future for nuclear power because of the climate change and the economics,” he said, adding that nuclear power is “absolutely” safe enough.

PROFITS RISE

He told a post-results conference call he could not estimate when Germany's Kruemmel and Brunsbuettel nuclear plants -- jointly owned with E.ON EONG.DE -- would come back on line after shut-downs last summer.

The Brunsbuettel outage contributed to a 7.1 percent fall in the firm’s nuclear generation in 2007. Total power output rose 1.3 percent in 2007 while hydro generation rose by 4 percent.

The 1400 megawatt Kruemmel facility and the 806 megawatt Brunsbuettel plant, located in the northern state of Schleswig-Holstein, were shut in June after a fire at Kruemmel caused a short circuit at Brunsbuettel as well.

The restart of the plants has been put off several times. German authorities have said Brunsbuettel will not restart until the end of March at the earliest and Kruemmel before mid-May.

Vattenfall Europe Nuclear Energy spokesman Ivo Banek said the firm is assessing which screw anchors and dowels -- steel parts that fix other parts to walls -- need replacing after an inspection showed not all are positioned to specifications.

“The problem is that there are literally many, many thousands of these in a nuclear plant,” Josefsson said.

“We don’t have to check them all but the authorities of course decide how many we should check.”

Earlier on Thursday, Vattenfall said 2007 operating profit grew 2.7 percent to 28.6 billion Swedish crowns ($4.43 billion) from 27.8 billion in 2006. Fourth-quarter operating profits surged nearly 25 percent to 6.8 billion crowns.

Vattenfall credited German power generation for the rise, saying operations there were helped by ample available capacity at coal-fired plants and better prices received on the European Energy Exchange in Germany.

The Vattenfall head told Reuters 2008 should be a “reasonably good year” for the company financially.

Over the long run, Vattenfall wants to boost its overall share of the European power market to 10 percent from a current 5 percent, but Josefsson said there was no target date for this.

Josefsson said the Vienna-based International Atomic Energy Agency will next week begin an inspection of Forsmark after being invited by Sweden. He expects a report toward the end of the second quarter that he believes will be positive overall.

“Of course there will be some findings. There are always findings,” Josefsson said, adding that IAEA inspections yielded about 25 findings on average.

The Forsmark incidents had showed a need for changes in the culture at the facility that led Vattenfall to take steps to shore up safety, Josefsson said.

“I think we have still a slope to go but we’re going to get there, where we want to be,” Josefsson said.

The Swedish utility's German arm, Vattenfall Europe AG VTTG.DE, suffered an erosion in credibility after the nuclear shut-downs and a rise in power prices caused a media uproar that sent some 200,000 customers streaming for the exits.

“Today this exodus has ceased to exist,” Josefsson said.

“We have taken a lot of actions and the trust and the credibility in the company has improved.”

Vattenfall in January entered the nationwide Germany power market through an internet service called Easy. Josefsson said the service was “doing very well” but that it was early days.

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