First you see them now you don't

This blog post also appeared in an edited version in Fuel Cycle Week , V8N343, September 10, 2009, published by International Nuclear Associates, Washington, DC

Reuters wire service found itself in a double boomerange effect in its coverage of nuclear energy issues this week when it comes to the award date for the expected $40 billion UAE nuclear tender.  On Tuesday Sept 8 it put out a story that the United Arab Emirates (UAE) was "days away" from awarding a $40 billion contract to one of three global consortiums to build up to 5,000 MW of nuclear reactors to generate electricity. 

On Wednesday Sept 9 Reuters posted another story in which the UAE categorically denied that it was "days away" from the contract award.  A government official familiar with the negotiations told the wire service “the UAE is not days away from awarding this contract. The process is still ongoing.”

US 1-2-3 agreement still on the front burner

There is a good reason why the UAE is not "days away" from awarding the contract. The reason is the US 1-2-3 nuclear agreement is still pending before Congress which has until mid-October to make up its mind whether to vote on a joint resolution against the deal.  If Congress does nothing, the agreement is approved, and US firms can sell nuclear fuel and technologies to the gulf nation.  It follows that the UAE is not going to make a contract award until the ink is dry on the US 1-2-3 nuclear energy agreement. 

What the UAE has going for it, to meet criticisms from nonproliferation experts, is that it has agreed not to develop its own uranium enrichment capability nor reprocess spent nuclear fuel. Instead, the UAE has pledged to buy its nuclear fuel from global supplies which could include the US.  In doing so it sets a precedent which is the exact opposite of what Iran is doing and simultaneously becomes a showplace for the Obama administration's nuclear policies in the Middle East.

Coincidentally, this week UAE Crown Prince Mohammed bin Zayed (right) is lobbying in Washington for the 1-2-3 agreement.  He started with a kick-off meeting with U.S. Secretary of State Hillary Clinton followed by meetings with members of Congress.  On Thursday he is scheduled to meet with President Barack Obama and U.S. National Security Advisor Jim Jones.

The UAE also cracked down on illicit exports from its ports.  Last month it seized a North Korean ship carrying arms disguised as oil equipment said to be bound for delivery to Iran.  The timing could not have been better to put wind in the sails of Prince Zayed as he glides through government corridors this week.

Why build reactors in an oil patch?

The UAE needs the reactors to meet three critical goals. The first is to power water desalination for its rapidly growing population. The UAE has been burning natural gas for this purpose, but last year actually started importing it because domestic supplies are running out.  Second, the UAE needs the electricity to ramp up its aluminum smelting and manufacturing business. Third, it needs more electricity to power its massive new urban infrastructure.

Three bidders all waiting

To get there, three huge global consortiums have submitted bids.  A consortium from France, Areva, GdF Suez, and Total, is in said to be the leading bidder according to the latest Reuters reports. It is a 'winner-take-all' proposition for as many as four-to-six reactors.

The other bidders include a group that includes GE-Hitachi, and another of Korea Electric Power Corporation, Hyundai Engineering and Construction and Samsung C&T Corporation. 

However, the French are in the lead according to the Eurasia group, a consultancy on global risk management, told wire services Emirati leaders have historically valued France’s nuclear experience.   The group notes that a major deal with the French government would “fit within the UAE’s diversification plans in terms of both energy and security.”

President Nicolas Sarkozy visited the UAE in May to open a military base.  France is already a major player in the UAE's defense space, so a deal on nuclear energy would be an extension of the current broad relationship between the two countries.

Where that leaves U.S. firms that want to benefit from the 1-2-3 agreement is unclear.  It could turn out that like the India 1-2-3 agreement, the U.S. does all the heavy lifting on nuclear energy and nonproliferation issues, and foreign firms reap the benefits.

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Idaho Samizdat is a blog about the political and economic aspects of nuclear energy and nonproliferation issues.  It covers the nuclear energy industry globally.  Additionally, the blog has regional coverage on uranium mining in the western U.S.  Link to original post