January 21, 2008 / 1:59 PM / 11 years ago

Middle East speeds up shift to nuclear power

DUBAI (Reuters) - Oil near $100 and rapid economic growth are giving growing momentum to Middle East plans to develop nuclear energy to help meet escalating power demand.

Iranian technicians work inside the nuclear power plant in Bushehr, about 1,215 km (755 miles) south of Tehran, Iran February 26, 2006. Oil near $100 and rapid economic growth are giving growing momentum to Middle East plans to develop nuclear energy to help meet escalating power demand. REUTERS/Raheb Homavandi

Record oil revenues have driven an economic boom that is straining the region’s power grids. To keep the export cash coming in, some of the largest oil and gas producers are looking at nuclear energy to minimize burning fuel for power at home.

“Nuclear is the logical thing for countries in the Gulf to do,” said Giacomo Luciani, director of the Swiss-based Gulf Research Center Foundation. “When oil was cheap and abundant, it was right to burn it for power. Right now it’s irrational.”

Nuclear power could come quickly to the region if cash-rich states such as the United Arab Emirates buy reactors off the shelf from international companies, rather than embark upon the decades-long process of developing the technology themselves.

The region’s autocratic rulers could quickly push through the financing and licensing, processes that take years in more democratic countries, and have nuclear power plants up and running within a decade.

“The technology is available,” said Malcolm Grimston, associate fellow at British think tank Chatham House.

“My suspicion is that it can be done much more quickly in some of these countries than in the U.S. and the UK. If you’ve got money ready to go and the licensing system that says ‘right, we’re accepting this without further ado’, then you could have nuclear electricity generation in about six years.”

French President Nicolas Sarkozy gave nuclear power a push forward on a visit to the Gulf last week, signing a cooperation deal with the UAE and offering his country’s nuclear know-how to the world’s largest oil exporter Saudi Arabia.

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

French companies Total (TOTF.PA), Suez LYOE.PA and Areva CEPFi.PA said they would join forces to develop plans for two new-generation nuclear reactors in the UAE, with a possible start-up date of 2016.

OFF-THE-SHELF TECHNOLOGY

Off-the-shelf technology such as Areva’s reactors would require the UAE to import nuclear fuel rather than enrich uranium itself. That would limit potential crossover with a nuclear arms development and ease some of the strategic concerns that have surrounded Iran’s program.

“Those strategic concerns would still be there,” said Patrick Clawson, deputy director for research at the Washington Institute for Near East Policy. “But they would be mitigated if the fuel came from an internationally controlled facility.”

The Gulf Cooperation Council (GCC), a loose gathering of Arab states including the UAE, said in 2006 that it was studying developing a joint nuclear energy program. The announcement raised concern of a regional arms race between the bloc and Iran. The U.S. and other western governments accuse Iran of attempting to develop nuclear weapons, a charge Tehran denies.

The increasingly commercialized nature of nuclear technology means there is little Western governments could do to stop other countries in the Middle East buying reactors, Grimston said.

“Whether the West smiles on them or not I’m not sure that today’s governments of the West would actually be in a position to stop... the sale of a reactor if that was what the countries of the region really wanted to buy,” he said.

Competition between sellers, along with competition among buyers in the region to be first to have nuclear power, could also speed the process, analysts said.

Russian President Vladimir Putin said last year his country would consider helping the kingdom with a possible atomic energy program. China, too, might look for a role, analysts said.

The UAE is talking to several countries — not just France — about its nuclear ambitions, an official said last week.

ECONOMIC IMPERATIVES

Natural gas is the fuel of choice for electricity generation in many countries in the Middle East, but power growth has been so fast that it has outstripped gas supplies.

Demand for electricity across the GCC is growing at an annual rate of around 8 percent, said Rajnish Goswami, vice president of gas and power at energy consultancy Wood Mackenzie. The speed of demand growth has encouraged governments to look at all their potential power supply options, including coal.

With the exception of Iran and Qatar, the rest of the countries in the region are short of gas. The UAE has begun imports from Qatar, but will still need more gas early next decade. Iran has yet to develop its gas for exports, and Qatar has put new projects on hold to study the performance of its giant North Field, raising questions over how the region will source future additional gas supply needs.

“For the UAE, it’s not clear where its gas is going to come from,” Goswami said. “I’m not sure that nuclear has a stronger commercial case than imported coal or gas, but it’s an option that needs to be looked at.”

The region’s governments would also rather see gas used as a feedstock for petrochemical plants and heavy industry as they look to diversify their economies away from dependence on oil export revenues.

Editing by James Jukwey

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