Oil Report

UPDATE 2-France signs nuclear agreement with Saudi Arabia

* France eyes power-hungry Saudi Arabia for nuclear deals

* French nuclear groups must learn to work together-Minister

* Partners seen in Areva’s mines, EDF not excluded-Minister

* EDF-China’s reactor accord will not hurt Areva - Minister

(Recasts with more details, rewrites throughout)

By Muriel Boselli

RIYADH, Feb 22 (Reuters) - France’s energy minister signed a nuclear cooperation accord with Saudi Arabia, offering atomic know-how to the top oil exporter, a day after Paris unveiled measures to streamline its disputes-plagued nuclear industry.

The cooperation agreement, which includes training of Saudi staff, is a first for the kingdom but follows French accords with the United Arab Emirates and Qatar aimed at promoting one of France’s flagship industries in the power-hungry region.

“All our industrial groups are at your disposal in the nuclear and renewable energy industries,” Energy Minister Eric Besson told Hashim bin Abdullah Yamani, the head of King Abdullah City for Atomic and Renewable Energy, at the signing.

Although it sits on the world’s biggest oil and gas reserves, Saudi Arabia is struggling to keep up with rapidly rising power demand. The kingdom is weighing up nuclear options from various countries including Russia, a French diplomatic source told Reuters, asking not to be identified.

France lost a landmark $40 billion deal in Abu Dhabi in December 2009, spurring some major soul-searching in governmental circles and public disputes between the chief executives of former power monopoly EDF EDF.PA and nuclear reactor maker Areva CEPFi.PA. The state controls both groups.

EDF operates 58 nuclear reactors in France.

On Monday, the French nuclear policy council unveiled measures -- including steps to turn Areva’s uranium mining arm into a subsidiary as well as partnership talks with China -- aimed at unifying the country’s nuclear industry. [ID:nLDE71K07M]

“Even if I am pleased (with the council’s ruling), I am under no illusion as everything starts here. The habit of working together must become the norm,” Besson told French journalists accompanying him in the Saudi capital for discussions between oil producing and consuming nations.

Besson said mining group Eramet ERMT.PA could be among companies taking a stake in Areva's mining business after the council asked the group to put its mines into a subsidiary.

“There could be room for partners to come in,” Besson said, adding: “It could be Eramet. It could be others.”

When asked whether EDF could take a stake in the new unit, Besson said: “This has not been discussed (by the council). This is neither accepted, nor rejected.”

EDF Chief Executive Henri Proglio and Areva CEO Anne Lauvergeon have been at odds since Proglio called for Areva’s break-up and the leadership on France’s key nuclear bids abroad.

Lauvergeon said EDF’s leadership would deter EDF rival utilities from buying Areva reactors.

Areva did not comment on the council’s ruling, but Lauvergeon has repeatedly opposed Proglio’s calls to break up the group, whose activities include mining, reactors and waste recycling. Besson, however, said his chief of staff had got a rather upbeat message from Lauvergeon’s chief of staff.

“I am not Areva’s spokesman but ... (the message indicates that) Anne Lauvergeon considers, even if she doesn’t necessarily agree with all the council’s elements, that important decisions were taken for the French industry, and all in all she finds them balanced.”

Besson also defended a go-ahead given to EDF to build a new-generation 1,000 megawatt nuclear reactor with Chinese partners, saying this would not harm the interests of Areva, which is already developing the medium-sized reactor ATMEA.

Industry observers have said France lost the Abu Dhabi deal mainly because the offer, a state-of-the-art 1,650 megawatt reactor EPR, was too powerful and pricey for the Gulf emirate.