Oil Report

UPDATE 1-France's Sarkozy offers Saudi Arabia nuclear help

(Adds quotes throughout, Total confirms UAE deal)

RIYADH, Jan 14 (Reuters) - French President Nicolas Sarkozy has offered Saudi Arabia help in developing peaceful nuclear energy at the start of a Gulf tour he hopes will secure billions of dollars in contracts for French firms.

After Saudi Arabia, where he met King Abdullah, Sarkozy was to go to Qatar and then on to the United Arab Emirates where he will sign a nuclear cooperation agreement on Tuesday.

“On technology transfer, the President raised the civilian nuclear issue” with King Abdullah, a source in the French delegation said. Sarkozy said a nuclear team was ready to visit Saudi Arabia in the coming weeks “to study possibilities”.

Sarkozy, who has already signed civilian nuclear deals with Arab oil producers Algeria and Libya, has made no secret of his view that all states have a right to atomic power.

“I have often said that the Muslim world does not have less right than the rest of the world to use civilian nuclear power to meet its energy needs in full conformity with the obligations that derive from international law,” he told al-Hayat newspaper, a London-based Arabic-language daily.

France's Total TOTF.PA confirmed on Monday it would develop two third-generation nuclear reactors in the UAE with Suez LYOE.PA as its main partner and state-owned nuclear reactor maker Areva CEPFi.PA.

The Gulf Cooperation Council -- a loose economic and political alliance of six Gulf Arab states including the UAE -- said last year it was studying a joint nuclear energy programme and has been in touch with the U.N. atomic energy watchdog about cooperating over such a scheme.


Sarkozy said France would be an honest friend to Saudi Arabia.

“France wants to be a friend of Saudi Arabia ... who does not seek to give lessons, but says the truth, a friend who asks for nothing, but is there when needed,” Sarkozy told the Saudi parliament which is an appointed body.

Saudi Arabia’s rights record -- often criticised by international rights groups -- has sometimes tainted Riyadh’s close political and economic ties with the United States.

Saudi Arabia, the world’s biggest oil exporter, is enjoying windfall revenues on record prices of around $100 per barrel. Many world leaders have visited in the past two years seeking a piece of the action through business contracts.

Sarkozy also told King Abdullah that Saudi Arabia should use its influence to moderate oil prices, which the French president said should realistically be around $70.

Accords signed between France and Saudi Arabia on Sunday night involved the oil and gas sector as well as educational and administrative training programmes. There was no word on how much these agreements were worth.

Sarkozy told journalists he hoped for some 40 billion euros worth of deals to result from his Gulf tour.

From Saudi Arabia specifically, French officials talked of 10 billion euros ($14.78 billion) worth of transport contracts, mainly for high-speed trains, 1.5 billion euros in aviation contracts and 6 billion euros in water and electricity projects.

Arms and defence sales could also generate 12 billion euros.

Firms set to benefit from the potential deals include Alstom, Bouygues, EADS, Vinci, Veolia, Accor, Carrefour, Thales, Eurocopter and Dassault Aviation.

Former French leader Jacques Chirac visited Riyadh in 2006 in a trip which failed to match similar high hopes on deals.

But judging by the rhetoric, Sarkozy’s chances are good. The French daily Le Figaro recently reported that King Abdullah during a June visit to Paris described the newly-elected Sarkozy as a “fiery stallion” taking over the reins of France.

Sarkozy revelled in the description on arrival in Riyadh, telling the King: “The fiery stallion is happy to see his wise old friend!”. (Writing by Andrew Hammond and Lin Noueihed, Editing by Richard Balmforth)