Exclusive Saudi K nuclear power plant love call… 12 trillion export jackpot hit

It was confirmed on the 31st that Saudi Arabia sent a request for participation in a bid to build a nuclear power plant worth 12 trillion won to South Korea. The Yun Seok-yeol government, which set a goal of exporting 10 nuclear power plants by 2030, is known to focus on winning orders for nuclear power plants in Saudi Arabia.

According to the Korea Economic Daily, the Saudi government sent a request to participate in the bid to Korea Hydro & Nuclear Power last week asking for its intention to build two 1.4GW nuclear power plants. It was identified that Saudi Arabia sent a request to participate in the bid to four countries, including South Korea, France, China, and Russia. When Saudi Arabia considered its intention to build nuclear power plants in 2018, it excluded the U.S., which was included in its preliminary list, this time.

Saudi Arabia is known to have highly evaluated the successful operation and price competitiveness of the Barakah nuclear power plant in the United Arab Emirates (UAE), the first nuclear power plant export case to Korea. Korea won a nuclear power plant export contract to the UAE in 2009 during the Lee Myung-bak administration, and has since completed the construction of four Korean-style nuclear reactors (APR1400) at a cost of US$18.6 billion (about 22 trillion won). It is known that the cost of building a nuclear power plant in Korea was only half of the cost suggested by France’s Areva, a competitor at the time.

One variable is that Saudi Arabia is refusing to inspect nuclear weapons by the International Atomic Energy Agency (IAEA) on the grounds that it will contain Iran’s nuclear development, and that the United States may put a brake on South Korea’s participation in the Saudi nuclear power plant project. According to Article 123 of the Atomic Energy Act of the United States, a country receiving nuclear technology from the United States must obtain prior consent from the United States government and Congress for uranium enrichment. APR1400, a Korean export model, was developed by introducing US source technology, so Article 123 of the US Atomic Energy Act applies when exporting. As a result, there are observations that the ‘Korea-US nuclear power alliance’, which was recently held at the Korea-US summit, has been put to the test.

An official from the nuclear power plant industry said, “For Korea to export nuclear power plants to Saudi Arabia, the deregulation of the US government is essential.

U.S. cooperation is essential to export to Saudi Arabia… ‘Korea-US nuclear power plant alliance’
Korea’s nuclear power plant competitiveness is the best in the world… There are many obstacles to Saudi exports

As Saudi Arabia has been seeking to participate in the construction of a nuclear power plant in South Korea, the Yoon Seok-yeol administration’s goal of exporting 10 nuclear power plants has also turned on a green light. As Korean nuclear power plants have high price competitiveness and the highest level of safety in the world, there is a consensus in the industry that it is worth trying to win orders for nuclear power plants in Saudi Arabia. If it succeeds in winning an order for a nuclear power plant in Saudi Arabia, it will also boost its nuclear power plant export strategy to Eastern European countries such as Poland and the Czech Republic. However, the stumbling block between Saudi Arabia and the US, which refuses to inspect nuclear weapons, is a stumbling block. It is observed that whether the ‘nuclear power alliance’ established by South Korea with the United States works effectively is a key variable in winning orders for Saudi Arabia’s nuclear power plants.

○The construction ability is the best…

Saudi Arabia, the world’s largest oil producer, is accelerating the construction of nuclear power plants after confirming the success of the Barakah nuclear power plant in the United Arab Emirates (UAE) built by South Korea. Nuclear power has emerged as a means to achieve both carbon neutrality and energy security.

Korea developed the ‘Korean-style nuclear reactor (APR1400)’ by purchasing the original technology from Combustion Engineering (merged with Westinghouse) in the US. Around 2012, the APR1400 succeeded in becoming technologically independent by securing additional technologies such as reactor cooling pumps. It is now possible to build nuclear power plants independently without assistance from the United States. In addition, Korea is rated as the best in the world in terms of parts and construction capabilities. Korea built the Baraka nuclear power plant at about 4 to 5 trillion won per unit, but the US and France cost twice as much to build nuclear power plants than Korea.

Despite Korea’s nuclear power competitiveness, it is too optimistic for Saudi Arabia to win nuclear power plant orders. This is because APR1400 uses US source technology, so Article 123 of the US Atomic Energy Act applies when exporting. According to this law, there are great restrictions for Korea to independently promote exports to countries that the US has blocked export of nuclear power plants. Another variable is Saudi Arabia’s reluctance to conduct inspections by the International Atomic Energy Agency (IAEA), conscious of Iran. Saudi Arabia is not yet a signatory to the IAEA Additional Protocol, which mandates inspections of undeclared nuclear facilities through an agreement with more than 130 countries. Saudi Arabia’s intention is to set fire to Iran if it goes nuclear. A KHNP official said, “If the United States does not take measures to ease restrictions on Article 123 of the Atomic Energy Act, South Korea will also be unable to export nuclear power plants to Saudi Arabia.”

○ Korea-US coordination is desperately needed

The South Korean government is looking forward to the fact that South Korea and the US agreed to jointly respond to a nuclear power plant order, triggered by the recent visit of US President Joe Biden and the Korea-US summit as an opportunity. The view of the nuclear power plant industry is that the best scenario is for South Korea to win the Saudi nuclear power plant construction project with the cooperation of the US and to share the profits by allowing US nuclear companies such as Westinghouse to supply key parts. In the case of the UAE Barakah nuclear power plant, which Korea won an order for in 2009, it is known that American companies share 5-10% of the total order amount.

If Korea succeeds in winning the Saudi nuclear power plant order through cooperation with the United States, it can gain an edge in the nuclear power plant export market in the future. Considering that Russia, a competitor, lost the trust of the international community due to the invasion of Ukraine, and France is known to require at least 10 trillion won to build one nuclear power plant, it is evaluated that Korea is ahead in price competitiveness.

Experts predict that the export market for nuclear power plants will also expand. Not only the Middle East, but also European countries, which had a high dependence on Russia for oil and gas, are becoming more aware of the importance of energy security, and their views on nuclear power plant construction are changing positively. The UK aims to have 25% of its electricity supply from nuclear power by 2050. The Czech Republic also plans to gradually increase the proportion of nuclear power from 37% to 46-58% by 2020. In particular, Poland has placed an order for six 1.4GW-class nuclear power plants, drawing the attention of nuclear power export countries. The size of the six nuclear power plants in Poland is expected to exceed at least 40 trillion won. An official from the nuclear power plant industry said, “The US and Korea are in a strange situation where they have to compete and cooperate in the nuclear power plant export market at the same time.

Reporter Lee Ji-hoon/Kim So-hyun lizi@hankyung.com