This week Saudi Arabia repeated this week its request for US assistance with its commercial nuclear power program during a visit by US Sec. of State Blinken. There are a lot of moving pieces in this puzzle.
What follows is an exercise in thinking about the request and some of the implications of it. Some of this commentary is conjecture, and, as they say in the dissimilar worlds of grand opera and basketball, “it ain’t over until the fat lady sings.”
NEWS AND ANALYSIS OF LATEST ON SAUDI NUCLEAR PROGRAM
NEWS
Foreign Minister Prince Faisal bin Farhan was responding to a question about recent news reports that Saudi Arabia is asking for U.S. aid in building its own nuclear program in exchange for establishing diplomatic relations with Israel.
“It’s no secret that we are developing our domestic civilian nuclear program and we would very much prefer to be able to have the U.S. as one of the bidders,” he said. “Obviously we would like to build our program with the best technology in the world.”
The exchange came at the end of a two-day visit to the kingdom in which U.S. Secretary of State Antony Blinken met with senior Saudi officials, including the country’s leader, Crown Prince Mohammed bin Salman. Blinken did not comment on the Saudi request for help with its nuclear energy program.
ANALYSIS
The real question is whether Saudi Arabia really wants Westinghouse AP1000 PWR type commercial nuclear reactors or does the government there want something else?
That “something else” would be South Korea’s 1400 MW PWR commercial nuclear reactor. There are four of them that are complete in Saudi Arabia’s Mideast neighbor the United Arab Emirates (UAE). Three of the four reactors are commissioned and in revenue service. The fourth will join them before the end of this year.
As a result of the success of the South Korean effort in the UAE, it would make sense for Saudi Arabia to ask the same South Korean industrial consortium to build the two full size (1400 MWe) nuclear reactors specified in the tender released in June 2022.
South Korea has two compelling competitive advantages. These are a mature supply chain for nuclear reactor systems and components and experienced engineering and construction management teams that could start almost immediately.
By comparison, Westinghouse efforts to build two AP1000s in the US at the Vogtle site in Georgia have been plagued by enormous cost overruns and crippling schedule delays caused in part by confusion over management of its supply chains and building new reactors to nuclear quality standards.
Worse, the collapse of the V C Summer project, which leaves two very partially complete AP1000s as $9 billion white elephants in South Carolina, has also been stained by multiple criminal convictions of contractor and utility executives related to the failure of the project.
Intellectual Property Dispute Overhang
A major impediment to a decision by Saudi Arabia to hire South Korean firms to build its reactors is that Westinghouse has sued South Korea’s nuclear firms over allegations that they infringed on Westinghouse patents in the design of the APR1400. For its part, the South Korean firms assert that the updated design, which they would offer to Saudi Arabia, the Czech Republic, and Poland, is a 100% a domestic product with no Westinghouse IP in it.
Clearly, Westinghouse is pursuing two objectives. It is spiking South Korea’s competition to book new sales in global markets and it is demanding revenue from licensing the intellectual property which it claims South Korea is still using. For its part South Korea’s parties in the dispute say they will not pay for IP they have not included in the current reactor design of its export offerings.
If Saudi Arabia really wants the South Korean reactors, it has the option to buy out the Westinghouse IP on a “no fault basis” and resolve the issue once and for all. Going forward, South Korea and Saudi Arabia could then be partners on the other bids. Saudi Arabia and South Korea already have such an agreement for South Korea’s 100 MW SMR.
What Does Saudi Arabia Really Want from the US?
There’s something else. Saudi Arabia’s plea for help from the US doesn’t necessarily mean it wants Westinghouse AP1000s. What it may really want, ahead of any decision whether to buy the reactors, are two things.
First, it will want to repeat the UAE strategy of hiring former officials of the US Nuclear Regulatory Commission (NRC) to help it create and manage a Saudi nuclear safety ministry to insure that the reactors it wants to build are compliant with internationally recognized safety and quality standards.
Second, it will want to hire American construction engineering firms to be the EPC for the project. As things stand now Saudi Arabia does not have either capability ready to handle the new build of two 1400 MW PWRs.
Foreign Minister Prince Faisal bin Farhan’s press statement needs to be read carefully. He said he would like US firms (Westinghouse) to bid, but he also mentioned other firms are also bidders.
It is plausible to conjecture from that statement that Saudi Arabia could be agnostic about buying the Westinghouse reactors from the US so long as it gets US technical assistance in nuclear regulation and construction management, both of which it lacks in terms of domestic capabilities.
What About a 123 Agreement?
Additionally, Saud Arabia has pointedly refused to sign a 123 Agreement with the US which means US firms are prohibited by the Section 123 of the Atomic Energy Act from selling nuclear reactor technology to that country.
Some nonproliferation experts have been shopping ideas about inking a limited term 123 agreement of 20 years that would open the door to US exports, but there is no guarantee that congress, which has veto power over 123 agreements, might go along. Plus, Saudi Arabia might be so hard over about not signing one, which would prohibit them from enrichment of uranium, that the idea will not get any traction.
In terms of the potential for political blowback, you want a signal about how strong anti-Saudi sentiment is in the US, just read the news about the strong negative public reactions to a recently announced merger of the US PGA golf tour with their Saudi counterpart. Metaphorically speaking, it has all the potential for the fireworks that would result from tossing a large chunk of sodium metal into the Tidal Basin that reflects the image of the Jefferson Memorial in DC.
However, technical assistance from US firms to Saudi Arabia for nuclear safety and construction management might be something the US would accept even in the absence of a 123 agreement. That policy fig leaf might generate congressional heat, but might not be as likely to produce a legislative show stopper.
It is also a bit of a stretch, but worth mentioning relative to the Saudi purchase of the PGA, that when the Saudi government really wants something, it just opens its checkbook and buys it. It follows that if Saudi Arabia really wants the South Korea reactors, without the baggage of the Westinghouse litigation, it could just buy out the controversial IP and close the book on the dispute.
What About China and Russia?
Saudi Arabia’s claim that it might turn to China for its reactors may be serious, but at the end of the day, it is unlikely that Saudi Arabia would want China owning and operating a major chunk of its energy security infrastructure.
China, like Russia, positions the sale of its nuclear reactors for export as an arm of its foreign policy. The geopolitics of either a Chinese or Russian bid being accepted by Saudi Arabia are adverse to that nation’s interests and make an award of the contract to either country unlikely. Plus, Saudi Arabia depends on the US military as part of its national security posture which is something it might jeopardize if it does business with China or Russia.
And France?
France, which is also a bidder for the Saudi nuclear deal, is hobbled in terms of making its case by its poor performance in building its 1600 MW EPR in Finland which was recently commissioned a decade late and billions over budget. The experience with construction of another EPR in Flamanville, France, is no better.
Also, French state owned enterprise EDF is contracted to build four EPRs in the UK. There is a real question of whether it has the capacity to take on any more new projects or could tap into its supply chain for a major initiative in Saudi Arabia.
WRAP UP
The Saudi government has twice gone public with its serious request for US assistance for its civilian nuclear energy program. The first time was last March just days after Iran announced it had enriched uranium to 84% U235 which is nuclear weapons grade material. There are legitimate concerns that Saudi Arabia might leverage a commercial nuclear reactor program to also support a nuclear deterrent to Iran.
If the US wants to prevent a Mideast arms race, then what’s needed is a new nuclear deal with Iran. The Biden administration might be able to see its way to supporting help for the Saudi civilian nuclear program if it can achieve that outcome.