Joining the nuclear club

25 July 2008
As Gulf states step up plans to develop atomic energy, they face growing competition for technology and expertise.

One after the other, countries in the Middle East and North Africa are lining up to join the nuclear power club. It seems that almost every week a government in the Middle East signs an agreement with a Western counterpart to co-operate on the development of civilian nuclear power and the transfer of technology.

However, it remains unclear how these individual moves to develop nuclear power fit in with the GCC’s ambitions to pursue a joint programme across the Gulf.

France, the US, and to a lesser degree Canada, have pledged assistance to several aspiring nuclear players. Only once a government-to-government agreement has been signed can Western reactor vendors gain access to the local market.

On a whirlwind tour of the region in Jan--uary this year, France’s President Nicolas Sarkozy signed co-operation agreements with the UAE and Qatar, and offered to provide Saudi Arabia and Egypt with assistance should they require it. France has also signed co-operation pacts with Algeria, Libya, Jordan and Morocco.

The deals immediately opened the door to French companies seeking a foothold in the region. In January, Electricite de France signed a protocol agreement for co-operation in the energy field, including nuclear power, with Qatar General Electricity & Water Corporation (Kahramaa).

Forming partnerships

Three other French companies - Total, Areva and Suez - also signed a partnership agreement in January to propose a nuclear power project to Abu Dhabi Water & Electricity Authority. The plan is for the consortium to build two 1,600MW reactors.
In an effort to make up for lost time, the US signed co-operation agreements with Bahrain in March and the UAE in April.

It is due to conclude a similar agreement with Jordan before the end of July and has expressed support for Egypt’s nuclear programme.

Between them, the US and France will dominate the Middle East’s nascent nuclear industry.

This is unsurprising considering they are home to three of the world’s most prominent vendor suppliers: Areva, and US companies Westinghouse and GE. The spate of co-operation agreements signed in recent months reflects the rivalry between the nuclear giants.

“They are competing at two levels,” says Alistair Smith, director of nuclear services at UK-based consultant PB Power.

“They are competing to sell reactors for power plants but it is more than that. They are trying to demonstrate that they support the peaceful use of nuclear power in the Middle East and they want to make sure that it goes in a way that will suit them.”

Energy security issues have also come into play. If the Middle East is forced to burn more gas to meet its burgeoning demand for power, there will be less left for export.

“The US particularly is trying to get them [Middle East countries] to stop burning fossil fuel so that there is more for the US,” says Smith.

Canada has also entered the market. In June, it signed a nuclear energy co-operation memorandum with Jordan.

This was swiftly followed by the signing of a memorandum of understanding between Amman and Atomic Energy of Canada (AECL) - another leading reactor supplier - and SNC Lavalin.

The two Canadian companies have also been approached by Tunisia as potential partners for a planned nuclear plant.

State power and gas utility Societe Tunisienne de l’Electricite & du Gaz (Steg) is carrying out technical and economic feasibility studies.

Third generation

The pool of reactor vendors is not limited to four companies. Russia, South Korea and China design what are termed ‘generation two’ reactors - versions of reactors that have been in operation around the world for the past 20-30 years.

But Westinghouse, GE, Areva and AECL specialise in ‘generation three’ reactors, which are easier to operate and more economical. They are also safer and produce less waste.

Of all the countries seeking to launch civilian nuclear programmes in the region, Egypt and the UAE have made the most progress so far.

“[They] have the greatest demand in the near term,” says Smith.

“Qatar, Jordan and Saudi Arabia have quite serious plans but demand is not growing at such a rate.”

Cairo is planning to build four nuclear power plants, each with a capacity of 1,000MW, by 2025.

The first of these will be built at El-Dabaa on the Mediterranean coast and is due to start operating by 2018.

The Egyptian Electricity Holding Company is currently evaluating proposals from consultants who will advise on the programme. It received seven bids for the work at the end of May.

The UAE is facing the prospect of demand for power growing from 15,500MW in 2008 to more than 40,000MW in 2020, with gas providing fuel for only 20,000-25,000MW.

The UAE government has published its strategy on the evaluation and potential development of peaceful nuclear energy.

It has also launched the Emirates Nuclear Energy Corporation (Enec), the body that will oversee the development of nuclear power facilities. Enec has in turn already approached at least nine international companies to manage the programme.

In Qatar, Kahramaa has included 5,400MW of nuclear power in its generation expansion plan from 2011 to 2036, under which the first 1,080MW will come on line in 2019.

But the nuclear plant will only be developed under a high-demand scenario. Under a base-demand forecast, Kahramaa will opt for 4,500MW of solar power instead.

Developing resources

Meanwhile, Jordan plans to provide 30 per cent of the kingdom’s energy needs using nuclear power by 2030 under a programme worth $10bn.

This will include the construction of four nuclear reactors and the development of local uranium resources.

According to sources close to Egypt’s nuclear programme, it is likely that the vendor who wins the first project at El-Dabaa will go on to develop the remaining plants too. The UAE is unlikely to follow the same model.

“Egypt wants to be in a position to operate its own reactors in the future,” says Smith. “The UAE wants reactor vendors to build and operate the plants. Therefore, there is no logic for them to all have the same design.

It is better to have competition on the construction and operating costs.”
It is this complete reliance on foreign expertise that some industry experts see as a major stumbling block for the region’s nuclear power schemes.

“In reality, there is zero capacity for nuclear power,” says Robert Bryniak, general manager of Abu Dhabi-based Golden Sands Management Consulting. “There are no experienced engineers to build the plants.”

"It is not a good option because for a nuclear power plant, you need special infrastructure and technology for a secure and safe operation,” says Mansour Hamza, managing director for Middle East, Africa and Asia business at German engineering consultant Fichtner. “There is also the issue of final disposal of nuclear waste to be solved.”

There are other constraints too. Apart from fears over accidents and proliferation, there are technical complications associated with nuclear power. Nuclear plants run at full power 24 hours a day.

They cannot run at below design capacity to reflect seasonal or daily differences. For this reason, it is not possible for any country to generate all its power using nuclear plants. “Nuclear should produce no more than 20 per cent of your minimum demand,” says Smith.

For example, if peak demand for power stands at 10,000MW and minimum demand is 3,000MW in the winter months, only 600MW should be generated in nuclear power plants.

One of the main difficulties that all the newcomers to the nuclear market face is securing the resources needed to build their plants. Just as there are constraints on the gas-fired power plant market, which is suffering from a lack of resources, there is a global shortage of capacity to build nuclear plants.

Growing demand

Vendors are already inundated with orders for reactors. The Middle East’s plans to develop nuclear power plants are running in parallel with UK and US plans to expand nuclear capacity. “Everyone wants to be operational in 2017,” says Smith. “China wants them even quicker.”

“[The biggest challenge] is the fact that they are joining the nuclear queue,” says Smith. “They [Middle East states] all want to build and operate their plants at the same time as utilities in the UK and US. They will be trying to choose a vendor that can give them the delivery date they are looking for.”

The situation will be most difficult for the first countries that go nuclear in the region.

It is almost certain that the UAE and Egypt will be the first to place orders with international vendors.

If and when more countries decide to pursue nuclear power, vendors will already have experience in the region and more resources should be made available.

What is more, starting from nothing could give the region a distinct advantage over countries with long-established nuclear programmes.

“The Middle East has a more flexible attitude to planning and site selection,” says Smith. “In the US and Europe, there are regulatory hoops to be jumped through. The streamlined process in the Middle East can help them jump the queue.”

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