Joining the nuclear family

28 March 2010

Nuclear energy is soon to become part of the regional power mix as Abu Dhabi, Jordan and Egypt make progress with their programmes

Abu Dhabi made history in the Gulf last December, when the emirate signed a $20bn contract with a consortium led by South Korea’s Korea Electric Power Corporation (Kepco) to build four nuclear reactors in the western region of the country. Under the deal, the first 1,400MW reactor will begin production in 2017, with the three additional units operational by 2020.

The deal is likely to be the first of several nuclear power contracts awarded in the Middle East and North Africa (Mena) region over the next few years. Faced with rising electricity consumption and decreasing fuel supplies, governments throughout the region are pursuing plans to develop civilian nuclear energy programmes.

“The UAE has moved the quickest and I think that is an incentive for the other countries,” says Abdelmajid Mahjoub, head of the Tunisia-based Arab Atomic Energy Agency.

The Arab Atomic Energy Agency was formed in 1989 under the auspices of the League of Arab States. It provides support to Arab countries pursuing nuclear programmes. At present, 13 of the 22 Arab countries are members of the organisation and Mahjoub says that several more have contacted him recently with a view to joining.

Development strategies

After the UAE, Jordan and Egypt are the Arab states that have made the most progress to date in developing their atomic energy programmes. In November, the Jordan Atomic Energy Commission (JAEC) appointed Australia’s WorleyParsons to carry out the feasibility study for the country’s first 1,000MW nuclear reactor to be built near the port of Aqaba. The following month, JAEC awarded a $173m contract for a nuclear research reactor to a South Korean team of Korea Atomic Energy Research Institute and Daewoo Engineering & Construction.

WorleyParsons is also advising the Egypt Nuclear Power Plants Authority on its plan to build 1,200MW reactor. Under an eight year, $160m contract the firm will conduct site and technology selection studies as well as overseeing the design, construction, commissioning and start-up of the plant.

Egypt, Jordan, Libya and Algeria would like to establish the [nuclear power] technology [themselves]

Abdelmajid Mahjoub, Arab Atomic Energy Agency

One country in the region that has been developing nuclear power for decades is Iran, although its 1,000MW Bushehr plant is still not yet operational. Uncertainty surrounds the plant’s expected completion date although Iran claims it will be ready by mid-2010.

Although the UAE, Jordan and Egypt are working to similar time scales – all three states plan to have nuclear power generation by 2018 – they are pursuing different strategies to achieve this. The UAE is effectively outsourcing its entire programme to the South Korean consortium, which also includes Samsung, Hyundai, Doosan Heavy Industries and other Kepco subsidiaries.

In contrast, Egypt and Jordan want to develop and employ local expertise. “The UAE model will probably not be followed by many countries,” says Mahjoub. “Egypt, Jordan, Libya and Algeria would like to establish the technology [themselves] in cooperation with other countries. Outsourcing is an expensive option which the poorer non-Gulf states cannot afford.”

“Jordan and Egypt do not have such deep pockets as the UAE,” explains Holger Rogner, section head for planning and economic studies at the International Atomic Energy Agency (IAEA). “[The UAE] has a completely different population structure, so from that perspective it makes sense to outsource. But that is not an option for Egypt and Jordan as it carries a reasonably hefty price tag.”

To develop local expertise, states will be reliant on international support from countries that already operate nuclear power facilities and many agreements have been signed to that effect. Jordan, for example, has signed cooperation agreements with Spain, Argentina, Canada, China, France, Russia, South Korea and the UK and has entered into memorandums of understanding with the US and Japan. Historically this has always been the way that nuclear expertise has developed.

“The [South] Koreans originally relied on lots of help from the US,” explains Mahjoub.

This expertise is now being exported to the UAE where the Emirates Nuclear Energy Corporation (Enec) tells MEED that considerable progress has been made since contracts were signed in December.

“We have been working closely with our partners Kepco in planning the scheduling and resourcing elements of the programme,” says Fahad al-Qatami, head of media relations at Enec. “We are also in the final stages of site selection, which has been an exhaustive process involving environmental, seismic, and geological studies, among others.”

Development of the nuclear technology may have been outsourced, but the UAE is still working on training and development of professionals by joining forces with local educational institutions such as Khalifa University of Science Technology and Research (KUSTR) and the Institute of Applied Technology (IAT).

Looking ahead, Enec says there will be plenty of business opportunities for other firms as it considers future contracts for long term fuel supply, training and equipment and construction work that falls outside the prime contract. “[In February] we hosted a delegation of companies from the US nuclear energy industry in Abu Dhabi to discuss potential future opportunities. We’re also meeting with firms internationally on the same matters,” says Al-Qatami.

In the short term, Kepco will supply fuel for the Abu Dhabi facility. It uses a range of mining and enrichment facilities to supply its 20 commercial nuclear power units already in operation. Kepco has a further eight under construction and an additional 10 reactors planned to be built by 2030. In February, Kepco bought a 10 per cent stake of the Imouraren mine in northern Niger in return for 10 per cent of its production for the life of the resource. France’s Areva signed a $1.5bn agreement to develop the mine in January 2008. Opening up the mine to Kepco is understood to be part of a long term cooperation agreement between the two companies to explore uranium reserves in Asia and Africa. 

Enrichment activity

For the past year, Areva has also been carrying out exploration activities in Jordan and on 21 February it signed a 25-year agreement to mine reserves in the centre of the country. The agreement stipulates it must also provide uranium to fuel Jordan’s planned nuclear reactors.  Jordan has no oil and gas reserves of its own and currently imports some 96 per cent of its energy requirements at a huge financial cost, but the country has an estimated 70,000 tonnes of uranium deposits.

Jordan says it intends to send its uranium for enrichment overseas, although it has also reserved the right to do it domestically. Rogner says it is unlikely that any regional states will embark upon enrichment activity. “None have indicated any intention to embark on any parts of the fuel cycle such as enrichment,” he says. “Most countries embarking on nuclear power until they have 10 reactors or so will enter into a purchase agreement and a fuel agreement.”

Enrichment is most commonly carried out in the US, the UK, Netherlands, Germany, France, Russia, China and Japan. The main production centres for mining are Australia, Canada, Kazakhstan, the US, Russia, Niger, Namibia and Brazil.

But obtaining fuel supplies is not the main challenge facing Mena countries who are seeking to develop nuclear power. More pressing are the needs to establish independent nuclear regulators, make legislative changes and install a local framework to support nuclear energy.

“Many countries right now are starting to review their existing legislation,” says Mahjoub. “Jordan already has a nuclear law and we know that in Egypt the final steps are being looked at – the comprehensive legislation has already gone through one of the chambers and it is now going through the final stage before being signed by the president.”

Egypt has had research reactors since the 1960s, but its plans were abandoned following the Chernobyl nuclear accident that happened in Ukraine in 1986. “Egypt has announced major nuclear programmes several times in the past and nothing has happened,” says Rogner, who says this could be a stumbling block for its programme. “The success of developing a domestic capacity depends on the policy support. If you have a government that stands behind the project and invests sufficient resources in it, then this can be done in a reasonable time.”

The UAE, Jordan and Egypt are planning reactors in excess of 1,000MW, but to support a plant of this size the transmission and distribution system has to be large enough, and this is another consideration the Mena countries are having to address.

“For the grid you need reliability, the largest unit should not be more than 10 per cent of total system,” says Rogner. “Experience shows there needs to be a 7-12 per cent spinning reserve. If something goes out you don’t want to have your system collapse.” If nuclear power stations have a capacity of 1,000-1,600MW this means the grid capacity must be 10,000-16,000MW. 

The power grids of smaller Gulf states in particular would be unable to support a large-scale atomic power plant, although they too have shown a keenness to establish nuclear power programmes. Bahrain and Qatar have said they would be interested in developing 300-600MW reactors, but many would to be required to satisfy rising consumption. Furthermore, the main advantage of a nuclear power generation is the  economies of scale offered by the technology – the initial capital investment is high, but the fuel costs over the life of the plant are much lower than for conventional fossil fuel plants. The larger the plant is, the sooner the investment cost is recouped. There is the possibility that these states might collaborate to develop joint nuclear projects.

The GCC-wide electricity network, which is nearing completion, would make it feasible for a large-scale plant to serve multiple countries and experts say this option is being given serious consideration. Yemen has also expressed an interest in being involved in a regional scheme. Sanaa began exploring the potential for a nuclear power programme more than a decade ago, but has lacked the funds to achieve this, and its grid is currently too small to support a large plant.

Nuclear technology offers a further advantage to the Gulf states in that it would free up volumes of oil and gas for export that are currently used to satisfy domestic electricity demand.

“It is basic economics,” says Rogner. “Given the oil price of today and what we expect in the future, you can produce oil for $1-2 a barrel. For one barrel of electricity equivalent you need three barrels of oil and that is then subsidised to the local market. Alternatively, you can take three barrels and sell for them for $70 and you get $210 instead of $6 and that pays for the nuclear power plant automatically.”

Given the region’s apparent appetite for nuclear power, the Abu Dhabi deal is unlikely to be the last nuclear contract award in the Mena region. This means there will be plenty of opportunities for the firms that missed out on the Abu Dhabi project to win work in the months and years ahead.

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