Saudi Arabia Eyes Chinese Bid for Nuclear Plant
Beijing’s offer gives Riyadh leverage in talks with Washington on proliferation
By Summer Said, Sha Hua and Dion Nissenbaum Aug. 25, 2023
Saudi Arabia is weighing a Chinese bid to build a nuclear-power plant in the kingdom, Saudi officials familiar with the matter said, in a move designed to pressure the Biden administration to compromise on its conditions for U.S. help in the kingdom’s quest for nuclear power.
The U.S. has said American nuclear aid is contingent on the Saudis agreeing to not enrich their own uranium or mine their own uranium deposits in the kingdom—nonproliferation conditions not sought by China, which has been seeking to strengthen its influence in the Middle East, to the consternation of Washington.
Saudi Arabia has asked the U.S. to help it develop a civilian nuclear program as part of a potential deal that would include diplomatic normalization with Israel, which Riyadh doesn’t recognize. Saudi Arabia is also asking the U.S. to provide security guarantees for the kingdom as part of such a deal.
Israel and some officials and lawmakers in Washington are worried that Saudi Arabia’s goal of developing a nuclear-energy program could pave the way for Riyadh to develop nuclear weapons.
China National Nuclear Corp., a state-owned company known as CNNC, has bid to build a nuclear plant in Saudi Arabia’s Eastern Province, near the border with Qatar and the United Arab Emirates, the officials said.
Saudi officials acknowledged that exploring the issue with China was a way of goading the Biden administration to compromise on its nonproliferation requirements.
The Saudi officials said they would prefer to hire South Korea’s
Corp., or Kepco, to build the plant’s reactors and involve U.S. operational expertise—but without agreeing to the proliferation controls that Washington generally requires.The Saudi officials said Saudi Crown Prince Mohammed bin Salman is prepared to move ahead with the Chinese company soon if talks with the U.S. end up failing. China will likely not impose the same kind of nonproliferation requirements, making it a more favorable partner to Saudi Arabia, said Justin Dargin, a Carnegie Endowment for International Peace nonresident fellow who specializes in Middle East energy.
China’s Foreign Ministry said China will continue to cooperate with Saudi Arabia in civil nuclear energy while abiding by international nonproliferation rules. CNNC didn’t respond to a request for comment.
Moving ahead with the Chinese bid would mark another geopolitical shift toward China for a Saudi kingdom that was once solidly in the U.S. camp.
Building
reactors for another country is inherently geopolitical, as it locks
countries into expensive, long-term contracts. Sun Qin, former chairman
of CNNC, once likened such deals to a “100-year marriage,” given the
time it takes from initial discussions to signing an agreement and then
on to the plant’s construction, maintenance and decommissioning.
China is Saudi Arabia’s largest oil buyer and biggest trading partner, and Beijing this year brokered a deal for Saudi Arabia and Iran to normalize relations. The Wall Street Journal has reported that China has helped Riyadh build its own ballistic missiles and helped the Saudis with a facility for extracting uranium yellowcake from uranium ore, an initial step toward enriching uranium. The Saudi government said it was working with the Chinese to explore for uranium, but the Journal’s disclosure raised concerns among U.S. and allied officials that Riyadh is keeping open the option of developing nuclear weapons.
Even if China only has a long shot, Saudi Arabia could keep CNNC as an option if Saudi Arabia wanted to “put fire under the feet of decision makers in Washington” to speed up a resolution between Kepco and Westinghouse or to facilitate a deal bargain between Saudi Arabia and Israel, said Philip Chaffee from the energy-information company Energy Intelligence.
But Saudi Arabia is also the biggest buyer of U.S. weapons and wants to remain firmly in the American security umbrella, the Saudi officials said. Executing a broad deal over U.S.-Saudi-Israel relations would cement the Saudi crown prince as a geopolitical force.
U.S. officials expressed little concern about Saudi Arabia’s outreach to China for help on its nuclear program, though they have pressed Riyadh to limit its military cooperation with China.
The Biden administration is convinced that U.S. operational and regulatory expertise is better than what China has to offer. Saudi discussions with the bidders have been repeatedly extended, with talks now expected to stretch until at least the end of this year.
The Chinese bid is at least 20% cheaper than offers received from two competitors—Kepco, and France’s EDF—making it attractive to the Saudis, the officials said. Saudi officials have said they view Kepco’s reactors and U.S. management as top of the line.
A legal dispute between Kepco and Westinghouse has held up nuclear discussions with the U.S. Westinghouse claims that Kepco’s reactors contain crucial Westinghouse-owned intellectual property, making the Korean company’s offerings subject to U.S. export controls. Westinghouse and Kepco didn’t respond to requests for comment.
U.S. and Saudi officials are also discussing the possibility of Saudi Arabia accepting the South Korean bid with the Westinghouse technology. The U.S. could relax export controls for the sale. No agreement has been reached.
The White House also has concerns about nuclear proliferation in the Middle East but is looking for a solution that involves U.S. technology. On Tuesday, Jake Sullivan, President Biden’s national security adviser, told reporters that it was likely to take a considerable amount of time to negotiate all the complex details of nuclear cooperation.
“There is still a ways to travel with respect to all of the elements of those discussions, and they get quite technical,” Sullivan said.
The crown prince, Saudi Arabia’s de facto ruler, has made obtaining nuclear power a priority. After a decade of nuclear discussions, the Saudis are pushing to award a contract for the Eastern Province plant, known as Duwaiheen—a two-reactor, 2.8-gigawatt facility—by the end of 2023 and eventually construct 16 reactors at a cost of some $80 billion to $100 billion.
The Saudi push for nuclear power is driven by two potentially existential issues: Iran’s nuclear program and a future in which the kingdom’s main export, oil, is no longer as valuable.
Saudi officials said nuclear plants would provide emissions-free energy for a growing population and reduce its reliance on burning oil—freeing up crude to export today. The Saudis are also worried about Iran’s nuclear enrichment, with the crown prince saying Saudi Arabia would develop nuclear weapons if Iran does.
Saudi Arabia has also talked with France and Russia about nuclear power. But Saudi officials said that they doubt France’s ability to deliver and they have sanctions concerns about going with Russia.
The United Nations atomic agency has pressured Riyadh to upgrade its 1970s-era oversight agreement to allow for greater inspections of its nuclear work. The International Atomic Energy Agency has long been pushing, with U.S. support, for all countries to adopt comprehensive safeguard agreements, which provide for much greater IAEA access to nuclear facilities. The agency has repeatedly said it is in talks with Saudi authorities on this.
Of the 31 reactors that began construction worldwide since the beginning of 2017, 17 are Russian designed and 10 are of Chinese design, according to the Paris-based International Energy Agency.
China’s nuclear companies have mostly indigenized the design and components of its nuclear plant, making it less susceptible to sanctions the U.S. could potentially impose.
China also would likely not object to Saudi Arabia mining for its own uranium and selling it abroad, a point of contention with the U.S. The kingdom wants to develop a mega mining industry by 2030 with big-enough uranium deposits to be commercialized.
The U.S. is pressing Saudi Arabia to impose limits on its relationship with China as part of any deal for nuclear help. In June, Saudi Foreign Minister Prince Faisal bin Farhan played down U.S. concerns about the kingdom’s ties with China, saying it would prefer to have the U.S. as one of the bidders.
“I think that partnership has given us and China significant benefits and that cooperation is likely to grow,” he said. “We still have a robust security partnership with the U.S….so I don’t ascribe to this zero-sum game.”
Complicating the talks is a debate in Israel over whether to accept the Saudi demand to be allowed to enrich uranium within the kingdom. “It is clear to everyone that if they start enriching uranium in the Middle East, everyone will want to,” Israeli opposition leader Yair Lapid told Israel’s Army Radio Monday.
Ron Dermer, Israel’s minister for strategic affairs and a key go-between with Washington, in an interview with PBS on Saturday, argued the Saudis could go to China or France to set up a native nuclear enrichment program, and that therefore it would be better to have the U.S., Israel’s most important ally, involved.
Dov Lieber and Laurence Norman contributed to this article.
Write to Summer Said at summer.said@wsj.com, Sha Hua at sha.hua@wsj.com and Dion Nissenbaum at dion.nissenbaum@wsj.com