Market Overview: The Middle East

Issue 3 and Volume 4.

Nuclear Power can be the Answer to Growing Demand

By Brian Wheeler, Editor

Historically known for their vast amount of oil and gas resources, multiple countries in the Middle East and North Africa (MENA) region of the world have turned their attention to nuclear power generation to keep up with the rapidly growing demand for electricity. Some nations’ power demand is growing by up to 10 percent annually. And this area of the globe has seen population rise from 127 million in 1970 to 305 million in 2005.

Interior view of Iranian and foreign technicians work at Iran’s Bushehr Nuclear power plant in a photo released on November 30,2009. UPI/ISNA/Mehdi Ghasemi.

“I don’t think people realize the level of the consumption of electricity in that part of the world,” said James Malone, chief nuclear fuel development officer for Lightbridge Corp.

Malone said Saudi Arabia alone is one of the 20 highest energy consuming nations in the world and it consumes about as half as much electricity of China, one of the world leaders of energy consumption and the number one emitter of carbon.

Some of the reasons countries in the Middle East and North Africa are looking at nuclear for power generation are similar to reasons in the United States, said Seth Grae, CEO of Lightbridge Corp. Not all of the countries have an abundance of oil and gas and some have little of either. These nations want to cut their reliance on other countries for energy supply and want to reduce the amount of pollution that is emitted by burning fossil fuels, specifically oil.

“They don’t want to consume more of their own hydrocarbons generally internally, especially when some feel there is limited time while they can still export those,” he said.

The Shaw Group, working in a joint effort with Westinghouse Electric Co., Toshiba International and Exelon, is one of multiple international companies who are looking to the Middle East for growth in the nuclear market.

“It is our view that they clearly recognize that they need to come up with substitute forms of energy to replace the combustion turbines that they have currently and use a different energy source to produce power,” said Jeffrey Merrifield, senior vice president of Shaw’s Power Group.

Early Development

Iran, one of the founding members of the Organization of the Petroleum Exporting Countries (OPEC) and possessor of the world’s third largest oil reserves and second largest gas reserves, has emerged as the first country in the Middle East region to move into a civil nuclear power program. In 1975, work began on two 1,200 MW pressurized water reactors. Due to budget issues and the Iranian Revolution, the Bushehr project, as it was known, was abandoned in 1979. After years of abandonment, Russia’s Atomstroyexport signed a contract to complete the project. After delivery of fuel in 2008, the 1,000 MW Unit 1 at Bushehr was set to be complete and operational by April 2011. In February, though, a pump failed and shed metal materials into the cooling system and led to the removal of all fuel. The reactor eventually started on May 8, 2011 and is expected to be commercially operational in 2012.

The Saudi Government projects the country’s demand for electricity to nearly triple from its current level by 2030, reaching an estimated 120 GW. Photo courtesy of the U.S.-Saudi Arabian Business Council

Iran has not acted responsibly with its uranium enrichment programs in the eyes of global atomic energy watchdogs. That has led to suspicions of nuclear weapons development, said Grae.

“They have been the model on how not to do this right and raise international suspicion,” he added.

Still, countries continue moving forward cooperatively even as Iran has acted separately from the rest of the region. Gulf Cooperation Council (GCC) members Kuwait, Saudi Arabia, United Arab Emirates, Qatar, Bahrain and Oman are all studying nuclear power generation. Together, these six nations produce 273 billion kWh per year with most from fossil fuel generation. Between 2000 and 2008, demand growth rose in the GCC nations by an average of 5 to 7 percent.

“We are seeing a focus on nuclear energy as part of a diversified energy mix that does not have a lot of options,” said Grae. “They will burn some hydrocarbons; they have some renewable energy efforts; they have essentially no hydro and that is the universe of what can be a growing demand for electricity.”

Regional Leaders

Of the GCC members, Saudi Arabia and the UAE are leading the way. Founded in 1971, the United Arab Emirates is a federation of seven different emirates which together comprise the third largest economy in the Middle East behind Saudi Arabia and Iran. Electricity demand in the UAE is growing by 9 percent a year and is expected to require 40 GWe of capacity by 2020, according to the World Nuclear Association. To meet demand, in 2009 the Emirates Nuclear Energy Corp. (ENEC) announced that it had selected a bid from a Korea Electric Power Co.-led consortium to build up to four reactors. The consortium involves Samsung, Hyundai, Doosan and Westinghouse Electric Co. As the main components supplier in South Korea for nuclear projects, Doosan Heavy Industries and Construction is supporting Korea Electric Power Co. (KEPCO) by supplying the nuclear steam supply system and balance of plant equipment to KEPCO for the project; a project that is reported to be worth $20 million and is expected to generate 5,600 MW of power when complete.

The reactor building of Iran’s Bushehr Nuclear power plant, 755 miles south of the capital Tehran, Iran, in photo release on November 30, 2009. UPI/ISNA/Mehdi Ghasemi.

“The success of the UAE, not just in ordering reactors but in being perceived by the world as doing this well, was a real breakthrough for others in the region showing a path that nuclear is a viable option for the region,” said Grae.

Lightbridge Corp. assisted the UAE in its decision to proceed with nuclear energy and has since provided advisory roles. In 2010, ENEC announced a site selection for the new reactors. The Braka site, which is closer to Qatar than Abu Dhabi city, is expected to have its first reactor generating power in the 2017 timeframe with three additional reactors coming online every year thereafter for three years. Still, a large amount of work needs to be completed in the GCC nations, such as the development of training programs and regulatory bodies and the construction of emergency response centers.

Large Ambitions

The UAE’s neighbor, Saudi Arabia, the largest oil producing nation in the Middle East, has even more ambitious plans for future development. The Saudi Arabian government has projected that the Kingdom will have 16 operating reactors by 2030. In 2010, the King Abdullah City for Atomic and Renewable Energy was formed to develop the $100 million civil nuclear program.

“The creation of the King Abdullah City for Atomic and Renewable Energy is a strong endorsement that nuclear power is going to be a meaningful part of their energy production going forward,” said Merrifield.

A number of countries have shown interest in nuclear power or have signed international agreements for the development of nuclear power stations. According to the Kuwait National Nuclear Energy Committee (KNNEC), Kuwait in 2010 signed agreements with companies in France, Jordan, Japan, Russia, Korea and the U.S. Department of Energy. KNNEC said that by 2030, 27 GW of power generation will be needed to meet demand, up from 10 GW in 2007. The role of KNNEC, among other goals, is to conduct technical studies to prepare and serve the national nuclear program.

In July, though, the Kuwait Times reported that the Deputy Prime Minister and Foreign Minister, Dr. Mohammad Al-Sabah, said in a statement that Kuwait is no longer seeking nuclear power for energy and is no longer eager to possess nuclear technologies.

Jordan Advances

To the north, a government committee in Jordan is reviewing bids to build the country’s first reactor. Atomstroy Export of Russia, Atomic Energy of Canada Limited and a consortium made up of Areva and Mitsubishi Heavy Industries all have bids in to construct the 1,000 MW Generation III plant. A decision will be made in December and construction is set to take place in 2015.

Kamal Al Araj, deputy chairman of the Jordan Atomic Energy Commission, told The National in Abu Dhabi that “the nuclear program is a strategic option for Jordan and we will continue with our plans. It will provide the country with a long-term solution for our growing energy needs.”

Energy demand in Jordan is currently increasing about 6 percent a year and Jordan imports roughly 97 percent of its energy needs. To meet demand, Minister of Energy and Mineral Resources Khaled Toukan told the Jordan Times in July that government officials are planning a second reactor as part of a long-term future with four reactors planned to come online within the next 25 years that could ultimately provide the nation with 60 percent of its electricity needs.

Construction of the second reactor is expected to take place within three years of the first to meet estimated demand of 5,000 MW by 2020.

Turkey Plans a Reactor

Sharing a border with Russia, Turkey in 2010 finalized a contract with the Russian State Atomic Energy Corp., Rosatom, to build the first plant in the Mediterranean port of Mersin. Energy and Natural Resources Minister Taner Yıldız told Turkish media earlier this year that the country has plans to deliver four plants by 2023 and that Turkey is “set on constructing these nuclear power plants. Nuclear energy is a must if we want to diversify our supply of energy.”

Russian media in March reported that although the disaster at the Fukushima Daiichi nuclear plant in Japan brought with it opponents to Turkey’s plans, the Russian-built VVER pressurized water reactors are still planned to be built with construction beginning in 2013. The first plant is expected to be online in 2018, with three other following every year after at a total price of $20 billion.

The supply chain for the planned reactors reaches out globally, from the U.S. to South Africa to Russia as MENA nations do not have the infrastructure in place to build large reactors. Even with the multiple countries and companies involved that could keep the projects on schedule and on budget, Merrifield said he does not expect a reactor to be online and generating power in the Middle East until the 2019 to 2020 timeframe.

“Broadly speaking, (the Middle East) is becoming one of the nuclear centers of the world,” said Grae.

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