Saturday, June 28, 2008

Russian nuclear energy program seeks investors

ironmanKiriyenko needs money and brains to drive the nation's nuclear initiatives

Reuters reports that in an extraordinary reversal Russia's nuclear energy internal new build and export program is now opening itself up to foreign investors. Previously, the Kremlin had decreed that the effort, which was touted to be as large as $25 billion-a-year over the next two decades, would be self-financed by government controlled agencies.

kiriyenko "Russia is prepared to sell stakes of up to 49 percent in its civilian nuclear projects to foreign investors," said Sergei Kiriyenko, (right) head of Russia's atomic energy agency Rosatom.

Russia is looking to build new projects -- two new reactors a year from 2012 to almost double the share of atomic energy to 30 percent by 2030.

"We'd rather make billions of dollars together than hundreds of millions alone," Kiriyenko told an audience of nuclear executives and government officials from around the world at the opening of the nuclear conference Atomcon in Moscow.

Vladimir Putin, Russian prime minister, aims to revive Russia's atomic reputation and formed a new company called Atomenergoprom which owns the civilian sector of the Russian nuclear industry. Rosatom controls Atomenergoprom. It covers the full nuclear cycle, from mining to processing to power. Ominously, it also includes the military's need for nuclear materials.

Atomenergoprom, which has sales of around $8 billion a year, is now open to outside investors Kiriyenko said of projects being developed by the agency, that,

"Previous thinking was that the nuclear industry is closed in Russia. We need to change that."

Why change now?

The Russians have previously excluded foreign investment from their nuclear build out, including uranium mines, fuel fabrication plants, and a national grid of electric transmission lines, despite having an estimated need for 13 trillion rubles in funding over the next few decades, a currency that until last August wasn't fully convertible to western money. The 13 trillion rubles, which sounds like an incomprehensible amount of money, works out to US$520 billion. Over two decades that works out to about $26 billion a year. It's still a lot of money. It's a whole lot more than the U.S. is investing in its new nuclear build.

Span of control problems

The Russians need more than money. They need technical engineering talent and know-how. They also need to change their management structure, and not just in the nuclear ministries.

The Russians are trying to put all of their state-owned nuclear energy activities under a single government roof, but published reports translated by Peter Zimmerman, of Fuel Cycle Week, in Fall 2007 indicate the massive bureaucracy may not be up to the task. According to a Russian assessment reviewed and translated by Zimmerman, the Russians think there are "serious reasons to oppose massive atomic construction at this time." The most important reason is that the Russians can't do it. The assessment says the scale and timeframe of the proposed construction of [10 reactors in eight years] pose "alarming scientific and technological risks." Translation - if you want it bad, you'll get it bad.

Russia wants to build 10 new reactors doubling its generating capacity in the next eight years, but the current level of uranium mining won't cover even half of the needs of these new plants. The likelihood that the Russians will build 10 reactors in the next eight years is about the same as Disneyland opening a new theme park on the planet Jupiter. In the past 50 years the Soviets have built at a much slower rate.

Blending down HEU won't last forever

Russia is blending down its nuclear weapons materials to make reactor fuel, but that's as finite source. Actual uranium mining is said to be about 3,500 tonnes/year while the Russians need about five times that amount. According to source documents in Russian reviewed by Zimmerman, "production capacities are clearly insufficient."

ivanov The Russians know they can't meet their needs for electricity solely from coal. Zimmerman's translations include a statement by First Vice-Premier Sergei Ivanov (right) who gave a blunt assessment in Fall 2007 of the nation's short term needs for nuclear energy.

He said, "there is no alternative [to nuclear energy]. Either we significantly increase it or in the very near future we will be facing an energy deficit." He said the share of nuclear energy in the national grid must grow from 18% in 2015 to 30% by 2030.

Last November the Russian nuclear energy leadership went to Canada to try to coax some investment from that country. Maybe this time Kiriyenko is casting a wider net? Perhaps he's now looking for Arab oil money? Certainly, he'll be calling on sovereign wealth funds? Will they answer?

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