Friday, January 25, 2008

India serves fig leaf to Sarkozy on state visit

A deal is not a deal unless it involves real money

Indian Prime Minister Manmohan Singh and French President Nicolas Sarkozy agreed, during a state visit this week, to discuss a civilian nuclear-cooperation agreement, which may help India to plug a power shortage using nuclear reactors.

While Sarkozy isn't going to duplicate the $12 billion deal inked with China last November, he's still the best nuclear salesman on the planet. That said what he got for his trouble was a plate full of fig leaves and little else to show for a high profile state visit. He didn't even get to bring along his new companion, a former super model, since the Indian government couldn't figure out how to work her into its diplomatic protocols.

However, the French discussions with India on nuclear issues will likely go nowhere unless India can make its case with the Nuclear Suppliers Group (NSG). That's only going to happen if India agrees to sign the Nuclear Nonproliferation Treaty. Since India has given no indication it is ready to do so, the talks are more or less diplomatic fig leaves for a fundamental problem for India's energy future.

Nevertheless, Bloomberg wire service reports France wants to generate a global consensus for India to get a waiver from the International Atomic Energy Agency (IAEA) that will allow the country to use civil nuclear energy, Sarkozy said at a news conference with Singh in New Delhi. The leaders did not give a time frame. What they are trying for is to use a separate arrangement involving IAEA inspections of India's civilian nuclear power plants as a substitute for signing the treaty.

India knows it needs civilian nuclear technology from the U.S., France, Russia and other nations to meet its target of adding 40,000 MW of nuclear power by 2020. India is hoping the IAEA agreement will open the door to agreements to move forward. That's a lot of megawatts, and generating it will require a lot of nuclear fuel. India needs some kind arrangement to get the fuel, and it is hoping the French leader can make it happen for them.

Bloomberg reports that C. Uday Bhaskar, an independent strategy analyst in New Delhi, said "France has been a very valuable voice, supportive of India's aspirations in the nuclear domain. The possible nuclear agreement with France shows that India is opening up to the global nuclear market."

Sarkozy is determined not to come home from India empty handed. If he can't build a reactor in India, he'll build one for India in France. While India is trying to find a path forward to meet its nuclear power ambitions, the next best thing to building a reactor there is to build one in France and hope to transfer the lessons learned to India. The two nations agreed that India will take part in building an experimental nuclear reactor in France, Singh said.

More wishful thinking emerges from the diplomatic speak. France will back offers from Areva, the French nuclear plant maker, to sell reactors to India after the IAEA agrees on safety rules and the country moves on to an "operational phase,'' Sarkozy said. It doesn't take much to realize that the French leader is intent on blowing right past the barriers that stopped the U.S. negotiations dead in their tracks.

The U.S. tried to develop a deal with India for two years, and all it got for its effort was a giant headache. The U.S. deal signed in principle in 2006 has been held up by differences over whether India would get a perennial supply of nuclear fuel, be allowed to reprocess spent fuel and have the right to conduct nuclear tests. Now with key negotiator Nicholas Burns leaving government service, it is unlikely anything further will be done on that end. Of course the Indian domestic political scene also contributed to the demise of the agreement.

So India has a problem. It wants to buy nuclear reactors, but it's national pride prevents it from signing on to the Nuclear Nonproliferation Treaty. Asking for a pass on it to get nuclear fuel didn't work with Australia, a member of the NSG, which last month made it clear it would not sell uranium to India because of this issue.

Reactors are going to India one way or another

All of this back-and-forth about India's unique approach to meeting international obligations hasn't stopped it from planning to buy nuclear technologies. State-run monopoly atomic energy producer Nuclear Power Corp. of India is in talks with France's Areva and three other overseas companies, to buy reactors, Nuclear Power Chairman S.K. Jain said last August.

Nuclear Power plans to place orders worth $14 billion to buy Areva's reactors, the AP1000 series of reactors from Toshiba Corp.'s Westinghouse Electric Co., the ABWR' series from General Electric Co. and the Russian VVR 1,000 reactors made by Rosatom. That's a lot of reactors in anyone's order book.

India signed a similar civilian nuclear agreement with Russia, which is helping India build two 1,000 MWe light water reactors at the Kudankulam nuclear power station in the southern state of Tamil Nadu. It appears the only exporter of nuclear technologies who is doing business in India wasn't even part of Sarkozy's visit.

Touring the Middle East plugging for reactor sales

In case you missed it Sarkozy made a grand tour of the Middle East earlier this month setting up potential new deals in the region that may take a decade or more to reach maturity. The New York Times reported that it is part of France's plan to reassert its role in the global economy and international political realm. The part about the reactors was reported by the Times as follows.

Mr. Sarkozy has signed a cooperation deal with the United Arab Emirates, the first step in building a $9 billion nuclear reactor there, and he has offered civilian nuclear cooperation to Saudi Arabia, Algeria, Egypt, Libya, Tunisia, Jordan and Morocco. In the wake of criticism that transfers of nuclear technology anywhere could be used on bomb programs, French officials rushed to make clear that it could take 15 years before those reactors are built, and to add that in some of the countries, they probably won’t be built.

Next stop South Africa

Reuters reports the next stop for the globe trotting Mr. Sarkozy is South Africa. He will visit South Africa February 26 & 27 accompanied by Areva CEO, Anne Lauvergeon. French nuclear power Areva will lead a consortium that will bid for the construction two European pressurised reactors (EPRs) in South Africa.

The consortium will also include French building conglomerate Bouygues, French state-owned electricity group EDF, and South African construction company Aveng Ltd. The consortium will file its bid at the end of January 2008. Areva's rival in the tender will be U.S.-based Westinghouse, owned by Japanese Toshiba.

South Africa announced in 2006 a plan to increase its electricity generation capacity to 40,000 MW by 2022. The electricity shortage in the country results in frequent blackouts, which is a major source of embarrassment for the government. The blackouts reportedly are cutting off electricity in major cities up to five hours a day. Economic growth in the country is being impacted by the lack of electricity.

National lab lends a hand to Idaho

State gets help from scientist to assess new nuclear plant

A top expert in nuclear energy has been dispatched to help the State of Idaho assess the impacts of a proposed new nuclear power plant in Idaho. Ralph Bennett, a scientist from the Idaho National Laboratory (INL), is working with the State of Idaho Office of Energy Resources.

According to a report in the Argus Observer, Bennett is looking at the impacts of the 1,700 MWe nuclear power plant being planned by MidAmerican Power for a site near Payette, ID. Bennett told the newspaper he is not affiliated with MidAmercian, but is helping the state government figure out what impacts the plant will have on the region if it is built. He noted that the Payette plant, which will use a design by Mitsubishi, is one of the largest of its kind.

The most significant impact the plant will have is its demand for cooling water. He estimates the Payette plant will need 25,000 acre feet per year. That's not a lot of water Bennett said but to get it the plant operator will have to buy water rights from the region's users. The Idaho Energy Office is located within the Idaho Department of Water Resources, which is a good place to be given the issue.

The most important reason MidAmerican wants to put the plant in Payette is to sell electricity to the region. In December Idaho lost out on two major manufacturing plants because of perceived inadequate power supplies. In response to criticism of the plant from environmental groups, Bennett remarked that it is hard to supply base load demand for electricity with wind. He added that nuclear energy is a stable source of electricity.

Bennett also pointed out that the NRC will hold hearings on the plant's combined operating and construction license so there will be plenty of opportunities for public input.

Bennett bio

According to his official biography, Dr. Ralph Bennett, has 18 successful years as a scientist and manager at Idaho National Laboratory, He currently serves as technical director for the Generation IV International Forum (GIF), a collaborative of 10 leading nations developing advanced nuclear energy systems. He has also facilitated a number of laboratory initiatives with the Regional Development Alliance, Idaho universities and the state of Idaho.

Chinese nuclear utility seeks investors

Expansion plans and new reactor deals drive the need for capital

China Guangdong Nuclear Power Holding Co (CGNPC) has announced that it would go public in a bid to "get bigger and stronger." The goal will be achieved by raising funds from stock markets. The move is unusual because of problems with China's stock exchanges.

Also, the smaller player of China's two nuclear power corporations just ordered two giant 1.6 GWe nuclear reactors from Areva for its new project in Taishan, Guangdong Province. Usually, in western countries, firms raise funds with stock offerings first and then order the reactors. It appears that in China things work the other way around. This is a new move for an entity which operates mostly within the parameters of being a state-owned corporation. Additionally, given China's vast holdings of foreign exchange, it is a question of why the nuclear utility would go outside of sovereign funding sources.

In a briefing to local reporters, as transcribed by the China Daily, Zhang Weiqing, a spokesman for CGNPC said, "We are capable of taking half of the domestic market shares of nuclear power supply, but we are far lagging behind the country's top five power suppliers, which reinforce our ambitions to get bigger and stronger in the future."

The spokesman did not comment on the nature of the stock, or whether it would be publicly traded and if so on what exchange. Foreign investors in China's wild stock market scene have been chagrined by some its of the ups and downs.

There is no exact Chinese translation for "irrational exuberance." The International Herald Tribune reported in 2007, China's stock markets have historically been marred by scandal and weak or nonexistent regulatory oversight. Stock investments have been problematic because of flaws that allowed murky, state-owned companies to use the market as a tool to raise money without real oversight or accountability.

Reactors need uranium and China goes out to get some

In terms of challenges to the business, the rising price of uranium is a concern. The spokeman said the company is increasing its reserves and looking for new uranium mines. The company has cooperated with local companies in Kazakhstan and Uzbekistan to explore uranium mines. "We will set up a branch in Kazakhstan soon," he added. The firm's new deal with Areva also allowed it to gain access to 35% of the production from Areva uranium unit UraMin Inc.

The Uranium Information Center reports China has been aggressively seeking uranium resources worldwide for its new nuclear reactor program. Here's a summary.

In September 2007 two agreements were signed in Beijing between Kazatomprom and CGNPC on Chinese participation in Kazakh uranium mining joint ventures and on reciprocal Kazatomprom investment in China's nuclear power industry. These came in the context of an earlier strategic cooperation agreement and one on uranium supply and fuel fabrication. This is a major strategic arrangement for both companies, with Kazatomprom to become the main uranium and nuclear fuel supplier to CGNPC. A framework strategic cooperation agreement was then signed with CNNC.

Shaw opens China operations

China's drive for new nuclear reactors is drawing the top talent of American engineering firms. The Shaw Group Inc. (NYSE:SGR) announced its Nuclear Division has opened a new office in Shanghai, China, to support the rapidly growing Chinese nuclear power marketplace. The office will accommodate the Shaw project management team already working on four AP1000 nuclear reactors at power plants in Sanmen and Haiyang.

The location also will facilitate close interaction with the Shanghai Nuclear Engineering Research and Design Institute,which provides important engineering services to the Consortium. It designed the Qinshan Phase I reactor and Chashma reactor and manages construction of Qinshan Phase III.

Shaw and Westinghouse Electric Company, its AP1000 Consortium partner, signed contracts in July 2007 to provide services and equipment for two AP1000 nuclear reactors in Sanmen and two reactors in Haiyang. China has indicated plans to build as many as 30 new nuclear reactors by 2020.

Monday, January 21, 2008

Turkey plans 5 GWe $10 billion nuclear build

Turkey pledges guarantees for nuclear power purchases
[Updates: 01/23/08 Bush endorses nuclear deal with Turkey, Update 02/08/08 tender release set for 02/21/08, tender delayed 02/21/08. tender deadline set for September 2008] 03/24/08]

Turkey stepped into the nuclear energy spotlight last week with an announcement that it will guarantee electricity purchases for 15 years to attract investment in nuclear power stations it plans to build, Energy Minister Hilmi Guler said at a nuclear-energy conference in Istanbul. The guarantee creates a bridge between the government's intent and the private sector's capabilities. It suggests that the provision of a guarantee to purchase the electricity for 15 years sets up the plant as a "merchant" with all of the investor risk assigned to the builders.

The issue of who will buy electricity from a nuclear plant once it is built is central to attracting investors and vendors. Companies that may bid next month to build Turkey's first nuclear power station want the guarantees. Turkey wants to begin building its first nuclear power station to cut its reliance on foreign fuel and help it meet electricity demand that's growing about 8% a year.

Bloomberg reports the government is preparing two sites for the first power stations, one near the Black Sea town of Sinop and another at Akkuyu on the Mediterranean coast, Guler also said. A third site is also planned for the three stations Turkey plans by 2013.

The government initially targets 5,000 megawatts of nuclear power that will require $10 billion in investment. Turkey, which has reserves of uranium, could become a center for the production of nuclear fuel from enriched uranium. However, Turkey is not a major supplier of uranium on world markets.

Foreign companies including General Electric Co. and Energie Baden-Wuerttemberg AG, Germany's third-largest utility, have expressed interest in building Turkish nuclear power stations.

According to World Nuclear News last November Turkey's parliament approved a bill for the construction of nuclear power plants in the country. The bill allows the government to launch tenders for the construction of nuclear power plants, establish a state company to run the plants, and to allocate shares to private sector companies.

Turkey to join GNEP?

The Turkish press reported on Jan 19th that nation will sign on to the global nuclear fuel program under GNEP. Turkey said it is considering becoming a full member.

“We are not negative on that. But we endorse remaining as an active observer for some more time,” Energy Minister Hilmi Güler told reporters in Istanbul. Turkey will probably join the GNEP this year in September 2008 by signing the Statement of Principles, a non-binding document that includes the doctrine of the 19-member group.

Güler participated in the first ministerial meeting of the GNEP in Vienna in September 2007 and continued to talk about Turkey's participation during his recent meeting with his U.S. counterpart Samuel Bodman in Washington. The Energy Dept. sent a high level team to Turkey this week for talks. Sec. Bodman was traveling in the Mideast last week, but Turkey wasn't a planned stop on his trip.

US Deputy Assistant Secretary of Energy Ed McGinnis, representing the GNEP program, held talks in Ankara with Turkish officials including Energy Minister Hilmi Güler according to US Embassy Press Attaché Kathryn Schalow.

A U.S. government embassy official speaking to a group of reporters said Turkey has been widely informed on the subject and “now the decision is up to Turkey.” “We had a very positive meeting,” the official added. The U.S official dismissed claims that the GNEP would be used as an international tool against Iran's nuclear program. “The GNEP is not to contain any country,” the official said. Iran's controversial nuclear program created a row between the international community and Tehran, which is closely monitored by the International Atomic Energy Agency (IAEA).

There were reports that Turkey would become an uranium enrichment center in the region, as a formula to stop Iran from enriching its own uranium. “I am unaware of such a thing,” the U.S. official said.

Those attending the joint meeting last week included Akira Omoto, director of the Nuclear Division of the International Atomic Energy Agency (IAEA) and Peter B. Lyons, commissioner of the United States Nuclear Regulatory Commission as well as representatives of international companies such as Enerji Baden, General Electric and AECL. Energy advisor to the president of Turkey, Volkan Ediger, prominent energy security analyst, Faruk Demir, Sabanci Holding Energy Group Chairman Selahattin Hakman, Zorlu Holding Energy Group Chairman Murat Sungur Bursa, CinerGroup energy advisor, Nevzat Sahin, and Çalik Holding CEO Ahmet Çalik.

Opposition to Turkey's nuclear plans surfaced almost immediately. The issue of U.S. involvement in Turkey's nuclear plans via GNEP could become as hot as a handful of chili flavored pistachios. Turkish opponents of the proposed action said they did not want the nation's nuclear fuel situation dictated to them by the U.S. They said they would accept monitoring and oversight by the IAEA. That may be why the government is giving its decision process some time.

Update 01/23/08

Wire service reports and a formal statement from the White House indicate President George W. Bush gave a green light to a civilian nuclear cooperation deal with Turkey, saying that private-sector proliferation worries have been addressed, the White House said this week.

Bush sent the US Congress a July 2000 agreement, signed by then-US president Bill Clinton, that would clear the way for transfers of nuclear know-how from U.S. firms to Turkey's planned civilian atomic sector. Turkey is a signatory of the nuclear non-proliferation treaty and insists it has purely peaceful intentions.

The agreement permits the transfer of technology, material, equipment. including reactor, and components for nuclear research and nuclear power production. The deal stalled shortly after being signed in July 2000 because US agencies received "information implicating Turkish private entities" in activities directly relating to nuclear proliferation. "The pertinent issues have been sufficiently resolved," it said. Portions of the government's justification for the assessment remain classified according to the White House statement.

Is the White House right?

On Jan 6 the Times of London published a potentially explosive report that alleged corrupt U.S. government officials allowed Pakistan and other states to steal nuclear weapons secrets during the past six years. According to the Times, Sibel Edmonds, a 37-year-old former Turkish language translator for the FBI, charges Turkish government officials and businessmen often acted as conduits or brokers for the Inter-Services Intelligence (ISI), Pakistan’s spy agency.

One of Edmonds’s main roles in the FBI was to translate thousands of hours of conversations by Turkish diplomatic and political targets that had been covertly recorded by the agency. The Times reports Edmonds gave evidence to closed sessions of Congress, but that her testimony remains secret.

The article lacks essential elements corroborating her story, such as the tapes of the alleged conversations Edmonds says she translated, and the name of the allegedly corrupt U.S. diplomat. The Times wrote that it received conflicting information from sources said to know about the allegations. There's a enormous amount of material about Edmonds on the Internet, but so far the Times is the only major newspaper willing to carry her story.

More likely if the story does get ink in the U.S, it will be used by congressional critics of the deal. Even if the black market nuclear network is gone, the Times article is not good news for the Bush Administration's efforts to promote nuclear technology exchanges with Turkey.

Update 02/13/08

Turkish Daily News -- Turkey will only allow previously tested models of nuclear plants to be built on its territory, the energy minister said at a press conference. We will not bring in models that are yet to be tested, and neither will we choose outdated technology, Hilmi Güler said. The Energy Ministry will launch a tender for a nuclear plant Feb. 21. The main goal is to provide private investment for the construction of the nuclear power plant. We want to minimize its costs for people, Güler said.

Update 02/21/08

The Herald Tribune in Paris reports that Turkey has delayed its release of a tender for three new nuclear power plants. The reasons are reported to be internal contracting issues, but in a deal of this size more likely the reason is proponents of various bidders have tied the process up in knots.

Update 03/24/08

Reuters reports that Turkey has set a tender date for September 2008.

Turkey has set a deadline of Sept. 24 for bids in a tender to build the country's first nuclear power station.

The power station will be built at Akkuyu near Mersin on the country's Mediterranean coast, the Official Gazette said.

It said the plant will have a capacity of 4,000 megawatts, plus or minus 25 percent.

Sunday, January 20, 2008

GE to expand nuclear fuel services

Making the nuclear fuel cycle more attractive to investors

The nuclear fuel business is a fractured landscape with many separate players in uranium mining, enrichment, and fuel fabrication. For the most part nuclear utilities haven't worried about the supply chain that gets them their fuel, only the price. That's changing with the new ramping up of new nuclear reactor construction in this country, China, and the rest of the world.

While fuel fabrication is very different than making yellowcake or uranium enrichment, the issue of vertical integration of the fuel side of the industry is getting new attention as a result of action taken this month by General Electric. A new business development effort is intended to make the nuclear fuel cycle more attractive to its investors and more profitable for the firm.

General Electric, which competes with Areva and Westinghouse in the reactor business, is developing its nuclear business into a more integrated company with reactors, servicing and fuel supply, following the example set by Areva. That firm's recent mega-deal in China spans the entire fuel cycle from uranium mining, to enrichment, fuel services, and an agreement to build a $15 billion spent fuel reprocessing facility. By comparison, Westinghouse, which has a deal for four reactors, doesn't have other business in China on either the front-or-back end of the fuel cycle.

What GE apparently sees is an opportunity to structure its nuclear business to encompass the entire nuclear fuel cycle. Bloomberg wire service reports that General Electric Co. plans to form partnerships with uranium companies to develop its nuclear business and improve access to the fuel that runs reactors. According to the wire service, GE's nuclear business unit is holding talks with "several miners, millers and converters" to find partners after agreeing last year to use a new technology from Australia's Silex Systems Ltd. The firm is also looking at commercial opportunities to reprocess spent nuclear fuel.

"We're in serious conversations, and I think we will do something in the first half of this year,'' White said in an interview with a Bloomberg reporter in London. He wouldn't name the companies, citing confidentiality agreements. "Obviously, if we're going into enrichment, we need the feedstock."

Nuclear utilities usually buy uranium themselves, and hire others to enrich and process it into fuel. Often the fuel is processed to meet the requirements of a specific reactor design. GE's ability to guarantee supplies would make the company's sales pitch for its reactors more comprehensive, especially for first-time buyers. GE and Hitachi have an approved reactor design with the NRC. According to NRC's list of new reactor licensing applications, GE-Hitachi reactors are slated to be the technology of U.S. several major plants scheduled to submit COL applications in 2008. The first load of nuclear fuel in a new reactor is always the largest single purchase a plant will make.

According to data from Westinghouse published in Fuel Cycle Week on 01/17/08 (subscription only), the initial core loading of a 1,150 MWe AP1000 reactor, requires of 550 kg U each for 264 fuel rod assemblies, or 145,000 kg U (319,000 pounds). At roughly every 18 months about a third of the core, or 48,000 kgU (105,600 pounds) would need replacing (in practice this would depend on the plant’s operating parameters). Over a 30-year lifespan the combination of core loading and refuelling would total some 1.1 million kg U (2.4 million pounds). Comparable numbers are likely for GE-Hitachi reactors. The firm has its own nuclear fuel service in partnership with Hitachi and Toshiba.

GE's White told Bloomberg, "We're getting more involved in the total cycle now than we ever have been. Some of what Areva is doing I think you'll see us do, but we probably won't get into mining ourselves." Unlike GE, Areva has extensive commitments to uranium mining in Canada and Africa.

General Electric's expansion into more of the front end of the nuclear fuel cycle strategy the firm says is a big bet. " White told Bloomberg, "These things are not cheap to develop." A new uranium enrichment plant, like the one Areva is expected to announce for a U.S. location in the first quarter of 2008, can cost up to $2 billion.

Efforts by GE and Areva face competition from Russia which has for many years provided a full fuel service for reactors they sold to other countries. It includes taking the spent fuel back. A new factor in the global nuclear fuel market is Kazatomprom which has a large nuclear fuel pellet plant in Kazakhstan. Earlier this year Toshiba sold 10% of its stake in Westinghouse, a $486 million deal, to that state-owned firm in return for access to uranium supplies for its global reactor market.

GE is headed toward the same business model as its rivals. It is a clear signal that suppliers of reactor technologies want to invest directly in fuel cycle facilities to secure future supplies for their customers.