Monday, August 30, 2010

Turkey in $10 billion reactor deal with South Korea

It is the second major nuclear energy contract in that country in the past year

turkey nuclearTurkey may have another major nuclear reactor deal in the works. According to English language press reports from Ankara, South Korea is positioned to sign contracts by November to build a $10 billion project. An energy official said the Sinop plant would have four reactors and a total capacity of 5.6 GWe.

At that price, the site at Sinop on the Black Sea coast in northern Turkey could become home to at least two 1,400 MW KEPCO reactors. The sign-off could take place at the G-20 summit scheduled for Seoul Nov 11.

According to the press reports, officials from KEPCO were in Ankara this week to meet with Turkey’s energy minister Taner Yildiz and other nuclear energy officials.

An English language Arab news channel had these additional details.

Sources at the energy ministry said that Turkey and KEPCO would provide 30% of the funding for Sinop and raise the remaining 70% through borrowing. London-based Standard Chartered is reported to be the financial adviser to KEPCO on the project. The Export-Import Bank of Korea (KEXIM) and Korea Export Credit Insurance Corp (KEIC) are said to be providing investment support for the project.

Turkey already has one deal in place, signed in May 2010, for new nuclear reactors on its Mediterranean coast to be build by Russia’s state-owned nuclear export agency. That deal took a long time to close due to differences over the price of electricity to be delivered from the reactors.

Speed of deal questioned

Haluk DireskeneliIn Turkey some experts were skeptical the new South Korean deal will move as fast as reported by the media. Haluk Direskeneli, an Ankara based energy analyst, (right) told this blog via email that the negotiations could drag into mid-summer 2011 when new elections take place. He feels the government will be in a strong position to ink a deal at that time. [Update 0100 GMT 31 Aug 2010: It isn't clear when the elections are to be held or how they will impact the reactor deal.]

He also said that the difference between the Russian deal and the South Korean one is that Russia is deeply involved in Turkey’s energy infrastructure and supply chain. It provides natural gas and oil to Turkey. On the other hand, he says, South Korea has only minor trading relationships with Turkey and isn’t involved in Middle East politics. Read more at a blog published by Haluk Direskeneli on this issue.

KEPCO’s growing market share in the Middle East

The KEPCO reactor is new to the global market. However, KEPCO has wind in its sails having inked a $20 billion deal with the United Arab Emirates in December 2009 to build four of them in that Persian Gulf country. The deal followed sign-off of a 1-2-3 agreement with the U.S. in principle will allow U.S. firms to supply reactor components and nuclear fuel to the UAE.

However, so far far contracts let by KEPCO have gone to other South Korean firms including Doosan Heavy Industries. The first contract awarded this past July is worth $4 billion. Using its own technology, Doosan Heavy Industries will design, manufacture, and supply the Nuclear Steam Supply System and turbine assemblies for the project.

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