April 4, 2019 / 1:26 PM / 19 days ago

Saudi plans to invite bids for nuclear power project in 2020: sources

DUBAI/RIYADH (Reuters) - Saudi Arabia plans to issue a multi-billion-dollar tender in 2020 to construct its first two nuclear power reactors and is discussing the project with U.S. and other potential suppliers, three sources familiar with the plans said.

FILE PHOTO: A car drives past electricity poles erected in east of Riyadh April 23, 2012.Reuters/Fahad Shadeed/File Photo

The world’s top oil exporter wants to diversify its energy mix, adding nuclear power so it can free up more crude for export. But the plans are facing Washington’s scrutiny because of potential military uses for the technology.

Saudi Arabia, which aims to mine for uranium, says its plans are peaceful. But Crown Prince Mohammed bin Salman said in 2018 the kingdom would develop nuclear arms if Iran did.

U.S., Russian, South Korean, Chinese and French firms are in talks with Riyadh to supply reactors, a promising deal for an industry recovering from the 2011 Fukushima nuclear disaster.

“Saudi Arabia is continuing to make very deliberate steps forward although at a slower pace than originally expected,” one of the sources familiar with the plans told Reuters.

Saudi officials previously said they aimed to select a vendor in late 2018, which then slipped to 2019. The sources said the tender would now be issued in 2020.

Two sources said the project was proceeding slowly partly because the kingdom was still in discussions with all potential suppliers rather than narrowing them down to a short list.

The plans have also been delayed by strained ties with Washington, which criticized Riyadh after the murder of Saudi journalist Jamal Khashoggi in the kingdom’s Istanbul consulate in October, a source familiar with the talks said.

Riyadh needs to sign an accord on the peaceful use of nuclear technology with Washington to secure the transfer of U.S. nuclear equipment and expertise, under the U.S. Atomic Energy Act. U.S. Energy Secretary Rick Perry said last week that the negotiations which began in 2012 were continuing.

The source said Washington has also been seeking to convince Riyadh to sign the International Atomic Energy Agency’s Additional Protocol on extra safeguards for verifying nuclear technology is used for peaceful applications. The kingdom has so far resisted, the source added.

The fate of these negotiations could determine whether Riyadh reaches a deal with U.S. firms, the source said.

WORKSHOPS

Saudi Arabia, which sent a “request for information” (RFI) to nuclear vendors in 2017, is holding workshops with vendors from five nations as part of the pre-tender process, one source said, adding that this was expected to last 12 to 15 months.

The King Abdullah City for Atomic and Renewable Energy (KACARE), tasked with developing the nuclear program, has brought in an executive from oil giant Saudi Aramco to help manage the pre-tender consultancy process, two sources said.

The Energy Ministry, overseeing the project, and the kingdom’s international press office did not respond to Reuters requests for comment.

KACARE has in the past said the kingdom was considering building 17.6 gigawatts of nuclear capacity by 2032, requiring about 16 reactors. But the sources said the focus for now was on the first two reactors and a potentially smaller program.

Neighboring United Arab Emirates is building a nuclear power plant, the first in a Gulf Arab state. Iran, across the Gulf, has a nuclear plant in operation and has been locked in a row over its nuclear ambitions with the United States.

Saudi Arabia, which has long vied with Iran for regional influence, has said it will not sign any deal with the United States that deprives the kingdom of the possibility of enriching uranium or reprocessing spent fuel in the future, both potential paths to a bomb.

South Korea’s state-owned Korea Electric Power Corp (KEPCO), Russian state nuclear group Rosatom, French utility EDF, state-run China National Nuclear Corp and U.S. Westinghouse have expressed interest in the Saudi project.

Additional reporting by Geert De Clercq in Paris; Writing by Sylvia Westall; Editing by Edmund Blair

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