* Beats French, U.S.-Japan groups - sources
* First nuclear power plants in Gulf Arab region
* Work on $40 bln deal to start in 2012 -sources
(Adds details, background)
By Amena Bakr
ABU DHABI, Dec 27 A South Korean consortium has
won a $40 billion contract to build several nuclear reactors for
the United Arab Emirates, industry sources said on Sunday.
The consortium would build the first nuclear power plants in
the Gulf Arab region under the deal, one of the largest energy
contracts ever awarded in the Middle East and also one of the
world's biggest nuclear power plant deals.
"We've won," said one industry source. "We're not sure about
the exact figure but I think it's around $40 billion."
South Korean President Lee Myung-bak was expected to sign
the deal with UAE President Sheikh Khalifa bin Zayed al-Nahayan
later on Sunday, sources said.
The consortium includes Korea Electric Power Corp. (KEPCO)
(015760.KS), Hyundai Engineering and Construction (000720.KS),
Samsung C&T Corp 000830.KS and Doosan Heavy Industries
The South Korean group beat a French consortium and another
group of companies from the United States and Japan.
"The UAE's choice must have been based on strictly
commercial terms because in terms of political clout in the
region it's nil," said Al Troner, president of Houston-based
Asia Pacific Energy Consulting.
"Korea has a good track record in terms of safety and price
and it's a surprise to see the U.S. and France are not part of
the bid because they are the ones with the more political
strength in the Middle East."
Nascent nuclear programmes in the Middle East, including in
Saudi Arabia and Egypt, have fuelled concerns of a regional arms
But the UAE has already pledged to import the fuel it needs
for reactors -- rather than attempting to enrich uranium, the
fuel for nuclear power plants -- to allay fears about uranium
enrichment facilities being used to make weapons-grade material.
Iran has long been at odds with the West over its declared
plans to use enriched uranium to generate electricity, a
programme the United States and European allies fear is a cover
to develop the ability to produce atomic bombs.
Work on the first nuclear plant in the Gulf Arab region was
expected to begin in 2012.
The UAE is the world's third-largest oil exporter and is
looking to nuclear power to meet rapidly rising electricity
consumption. Petrodollar-fuelled economic growth has left the
Gulf Arab state struggling to meet domestic power demand.
Abu Dhabi is driving the UAE nuclear programme. The emirate
holds most of the UAE's crude reserves, and has managed to avoid
the worst of the global economic slowdown as well as the debt
crisis that has hit neighbouring emirate Dubai.
"Competitive prices played a key role in the UAE's decision,
especially now with the economic crisis everyone is trying to
cut down on costs," said Christian Koch, director of
International Studies at Gulf Research Centre.
Abu Dhabi stepped in to provide a $10-billion lifeline to
Dubai earlier this month, to help its flagship company Dubai
World meet debt obligations.
Dubai's debt crisis had cast a shadow over financing
prospects for other Gulf borrowers but analysts expect blue-chip
names like Abu Dhabi and Qatar to weather the fallout.
"These are long-term projects and many of the finance
providers will look beyond what is happening today," said John
Sfakianakis, chief economist at Banque Saudi Fransi-Credit
Agricole Group in Riyadh. "The UAE's nuclear programme is a
He said the UAE could issue bonds in future to fund the
project, in addition to the usual mix of project financing
methods such as export agencies and banks.
"I think by the time they do this (issue bonds), the Dubai
storm will be over, plus Abu Dhabi would have a substantial
windfall from oil revenues," he said.
The UAE plans to build three or four nuclear reactors in a
first phase to help meet an expected rise in power demand to
40,000 megawatts in 2020 from around 15,000 MW last year.
(Additional reporting by Martin Dokoupil
(Writing by Simon Webb; Editing by Amran Abocar and John