Geopolitics cast a shadow over Russian nuclear supplies

Going west from Alexandria on the northern coast, the Sahel as Egyptians call it, past the Second World War cemeteries, and the swaths of holiday resorts, just outside the town of El Dabaa, a nuclear reactor is taking shape.

But international energy relations are never simple – this Russian project may be not just the first, but also the last of its kind.

El Dabaa is “the largest project of Russian-Egyptian co-operation since the Aswan Dam construction”, and “the first nuclear power plant built on the African continent using the Russian technology,” as Moscow’s state company Rosatom describes it. In fact, there is only one other nuclear power plant in the whole of Africa, a French design in South Africa.

Officially, the first Egyptian reactor will start up in 2028, but slow progress to date means the 2030s are more likely. Its eventual 4.8 gigawatts would meet almost a tenth of Egypt’s current peak electricity demand, save on gas, which is under perennial threat of running short, and cut carbon dioxide emissions.

Russia is better known, of course, for its oil and gas sales. Yet El Dabaa is far from the only site around the world where its nuclear engineers labour.

Nuclear power is virtually its sole high-tech export. Sergey Kirienko, briefly prime minister from March to August 1998 when the country defaulted on its debts, was appointed Rosatom’s head in 2005.

To general surprise, Mr Kirienko turned Rosatom from a bloated and loss-making state enterprise into a successful developer. Its flagship reactor, the VVER, is a very different and much safer design than the one that exploded so disastrously at Chernobyl in Ukraine in 1986.

Russia’s strengths in nuclear energy are multifaceted. It mines about 5 per cent of the world’s uranium. More importantly, it has almost half of the world’s enrichment capacity, to produce uranium suitable for nuclear fuel. Even the US and France depend substantially on Russia.

Of reactors operating outside Russia, 42 or about a tenth of the total are Russian models, and another 15 are under construction. Most of these are in the former Soviet Union or eastern European countries, but they also exist in China, Iran and India. There is only limited capability elsewhere to provide replacement parts or fabricate their specialised fuel assemblies, so continuing dependence on Rosatom is locked in.

And, as a study by Columbia University’s Centre on Global Energy Policy observes, Russia is the only commercial supplier of high-assay, low-enriched uranium (HALEU), used in some technically advanced new reactor designs currently under development in the US.

For developing countries in particular, Rosatom is attractive as it provides a “one-stop shop”, including construction, operations, fuel, training and waste disposal. And it offers generous financing packages, crucial for the huge capital costs and decade-long building periods.

Rosatom’s scale enables it to bring down construction costs, a perennial problem with nuclear plants in the US and Europe. Russia will loan Egypt about $25 billion for El Dabaa, equivalent to about a sixth of Cairo’s entire external debt.

About half of all international civil nuclear agreements between 2000 and 2015 involved Russia as supplier, a paper in Nature Energy found. The main other providers – China, South Korea, Japan, France and the US – contributed just 40 per cent between them.

As well as at El Dabaa, Rosatom is constructing further reactors in Turkey, Bangladesh, India and three European countries – Hungary, Slovakia and Finland.

In December, Rosatom submitted documents to take part in the tender for Saudi Arabia’s first nuclear power plant. Korea Electric Power Corporation (Kepco) and China National Nuclear Corporation (CNNC) are the other contenders, while France’s EDF and the American Westinghouse appear to have been excluded.

The Emirates Nuclear Energy Corporation and Rosatom signed a co-operation agreement in 2019. But the UAE’s Barakah plant is being built by a Kepco-led consortium, and fuel supply is spread across various companies, including Rosatom’s subsidiary as well others from France, the UK, the US and Canada.

Overall sales of Russian nuclear fuel and technology rose 20 per cent last year, reaching about $1 billion since the start of the war in Ukraine, according to the Royal United Services Institute, a British think tank. Although minor in comparison to the $18.5 billion Russia earned from oil in January alone, nuclear exports have not faced sanctions. They are strategically important, as countries fear having vital components of their energy supply cut off.

But equally, the new geopolitical landscape casts a shadow over future Russian nuclear supplies. The Russian military currently controls Europe’s largest nuclear plant at Zaporizhzhia in Ukraine, which features six VVERs, and where fighting has led to repeated fears of a serious accident.

Finland’s Fennovoima cancelled its construction contract with Rosatom in May and is now seeking fuel from Westinghouse for its existing plant. Bulgaria and Ukraine have also signed up with Westinghouse for fuel, and they, along with Poland, are working with the American company on possible new reactors, which will replace not just Russian nuclear materials but its gas and coal.

The Kremlin’s war thus creates yet further international energy complications. Its own successful nuclear export business will be badly hurt, even if it manages to complete El Dabaa and the other in-progress plants in Turkey and elsewhere. Its successful single-source, package model now looks to prospective customers like a dangerous risk.

The US and France have powerful geopolitical reasons to compete with Rosatom and CNNC, but a legal dispute hampers American co-operation with Kepco, while France’s Areva and EDF are mired in technical problems and long construction delays.

Still, the developing world does need capable international nuclear developers. Alongside weather-dependent renewables, expensive gas and polluting coal, numerous emerging economies see the advantage of including large-scale, low-carbon and reliable nuclear power in a diverse energy mix. Moscow’s stumbles create opportunity, if anyone else can seize it.

Robin M Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis