Saudi Arabian authorities have taken a step forward in actualizing their nuclear power program as the nation prepares to diversify away from fossil-fuel based power under a modernization plan conceived by emerging leadership in Riyadh.
Foreign Minister Adel al-Jubeir said the United States should afford Saudi Arabia the same rights as other countries to develop a peaceful nuclear fuel program. Riyadh has lined up ten other nuclear allies, should American officials scoff at the idea, the minister pointed out.
"We are looking at the issue of the viability of building nuclear reactors in order to produce energy so that we can save the oil and export it in order to generate revenue," al-Jubeir said. "The countries that we are talking to are probably roughly 10 countries or so around the world and we have not made a decision yet with regards to which path we will take and which country we will be focusing on more."
The plan is to spend $80 billion to build 16 nuclear reactors over the next two or three decades. To gain U.S. support for the initiative, Riyadh must accept a “123 agreement” with the U.S. State Department, which requires that any nuclear reactors be used only for non-bomb civil purposes. Twenty-two nations and the European Union have already signed such agreements.
CNBC asked about Saudi Arabia’s next move if the U.S. balked at its nuclear energy proposal. Al-Jubeir said, "This is really something that's up to our nuclear energy professionals to deal with, but our objective is we want to have the same rights as other countries."
Riyadh plans to source the uranium domestically to achieve “self-sufficiency in producing nuclear fuel,” an earlier report by Reuters says. Iran, Saudi’s regional rival, earned international approval to enrich uranium domestically in 2016 after signing a deal with the United States and its allies to allow international observers to monitor the nature of the previously clandestine program.
There’s probably a hint of resentment towards Tehran pushing Riyadh’s drive to build nuclear reactors and power plants. But much of the motivation is purely economic and practical. Saudi Arabians burn 700,000 barrels per day of their own fuel during their hottest months (May-August) to keep the lights on. If those devices were powered by nuclear reactors, the unused fuel could be exported for boosted government revenues in the last few decades of the oil trade.
The initial royal decree to develop a nuclear power program came in 2010, a few years after the Saudi-led Gulf Cooperation Council (GCC) commissioned its own study to build reactors on the Arabian Peninsula. The timing of Riyadh’s decree seemed ironic at the time, since that was the same year that large parts of the international community put Iran under economic sanctions for its nuclear program.
"The development of atomic energy is essential to meet the Kingdom's growing requirements for energy to generate electricity, produce desalinated water and reduce reliance on depleting hydrocarbon resources,” the decree read.
A previous report by Bloomberg says Saudi was on track to award contracts for the construction of the first plants this December, citing an unnamed government official. Bidders from China, U.S., France, South Korea, and Russia had pitched “to perform the engineering, procurement and construction work on two nuclear reactors.”
The United States and Saudi Arabia have enjoyed close relations due to the oil trade, but that relationship has been stressed by certain aspects of President Barack Obama’s foreign politics and President Donald Trump’s aloofness towards the monarchy when he is not located inside it.
Riyadh’s taunts, which brag about the country’s extensive international nuclear network outside its ties with the U.S., also reflect Moscow’s increasingly pronounced presence in the palace.
For Washington, offering a “123” will become a key part of salvaging its diplomatic bond with Riyadh as Russian influence eclipses American soft power.
The ball is in the United States’ court.
By Zainab Calcuttawala for Oilprice.com