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Russia Opening Iran Nuclear Plant Advances Goal to Play Power-Broker Role

Iran, under United Nations sanctions for its nuclear program, fulfilled a 36-year quest to join the club of atomic-powered nations today when Russia’s Rosatom Corp. switched on a reactor along the Persian Gulf coast.

The physical start of the 1,000-megawatt power reactor near the southern city of Bushehr makes Iran the first country in the Middle East to have a nuclear-energy facility, freeing more of its fossil fuels for export. Iran, which becomes the second Muslim state after Pakistan to have nuclear power, aims to build enough plants to generate 20,000 megawatts within 20 years.

“I’d like to thank our friend Russia and its people for helping us build this station,” Iranian Vice President Ali Akbar Salehi, who also heads the country’s Atomic Energy Organization, told reporters in the port city today. Bushehr “opens up a big front for cooperation.”

Rosatom Chief Executive Officer Sergei Kiriyenko, who attended the opening, said Bushehr is a “unique project” and shows that Russia “stands by its obligations.”

The U.S., while accepting that the Russian-fueled Bushehr reactor is for civilian use, has attacked Iranian President Mahmoud Ahmadinejad’s expansion of the nuclear program to include uranium enrichment.

Sanctions

The UN in June passed a fourth round of sanctions against Iran for refusing to suspend enrichment, which can produce reactor fuel or bomb-grade material. Iran denies it plans to make weapons and says the enrichment is for peaceful purposes, such as fueling a medical-research reactor in Tehran.

Under Iran’s agreement with Moscow-based Rosatom, the state-owned Russian company will supply uranium for the Bushehr plant and take away spent fuel.

The loading of fuel into the reactor began today and Russia will supply uranium for as long as is needed, Kiriyenko said. Bushehr’s operations and fuel deliveries are monitored by the UN’s International Atomic Energy Agency and as long as international norms are maintained, the reactor is acceptable, he said.

Power generation that will account for less than 4 percent of Iran’s electricity will start in about three months.

Iran’s past experiences with European partners in the nuclear field makes it anxious to secure fuel supply for the nuclear power plants it’s seeking to build, Salehi said. As a signatory to the nuclear Non-Proliferation Treaty, Iran reserves the right to continue uranium enrichment work on its soil, he said.

‘Cover Its Needs’

“Iran only intends to show the international community that it has the supply of fuel and the capability to cover its needs,” Salehi said.

Iran’s insistence on enriching uranium has led Russia and China, permanent UN Security Council members, to support the council’s sanctions, which include restrictions on financial transactions with the Islamic state.

In July, the U.S. blocked access to the American financial system for banks doing business in Iran. The European Union followed, banning investment and sales of equipment to Iran’s oil and natural-gas industries.

U.S. strategy toward Iran’s nuclear program doesn’t exclude military strikes, Defense Secretary Robert Gates said in June.

“The Bushehr technology cannot be used for military purposes even if the authorities wanted to,” said Anton Khlopkov, director of the Center for Energy and Security Studies in Moscow. “The Iranian government will try to use Bushehr to show the population how advanced the economy is.”

No ‘Military Purposes’

Operating the Bushehr reactor may save Iran, the Middle East’s second-largest oil producer, 11 million barrels of crude or 1.8 billion cubic meters of gas per year, the London-based World Nuclear Association said in a report.

Should Iran reach 20,000 megawatts of nuclear capacity, it may earn about $16.5 billion a year from the export of the oil it saves, based on a price of $75 a barrel, according to Bloomberg calculations.

The plant will also put Iran at least a decade ahead of more prosperous Middle Eastern neighbors such as the United Arab Emirates, which plans to build four nuclear plants by 2020. Iran joins 29 nations that currently generate nuclear power.

Iran said this past week it will pursue a third uranium- enrichment plant to add to Natanz and one being built at Qom. The country has also defended its right to enrich uranium to the 20 percent level, above which it is classified as weapons-grade, for use in the Tehran medical-research reactor.

Uranium Enrichment

Iran didn’t notify the IAEA about Natanz until 2002, after beginning work on it in 2000. Plans for the Qom enrichment plant, which is concealed in a tunnel, were revealed in September. Satellite photographs show construction at the Qom site began as long as seven years ago, the IAEA said.

Building of the Bushehr facility was started in 1974 by a predecessor of Siemens AG, Germany’s largest engineering company. After the 1979 Islamic Revolution that ousted the monarchy, the Germans quit, saying payments had been delayed.

Russia took over the work after signing a $1 billion contract in 1995, four years after the breakup of the Soviet Union left the nation’s nuclear industry short of funds and domestic orders.

“By dealing with Bushehr, the Russians have been able to increase their know-how and capacity and become competitive with Western countries,” Salehi told IRNA in an interview published Aug. 17. “They owe us a ‘thank you’.”

Next year, Iran intends to look into new power-plant projects, selecting potential sites, Salehi said today, adding that the work “is moving slowly but steadily.”

Kiriyenko said there are currently no talks between the countries for the construction of new power stations in Iran.

To contact the reporters on this story: Yuriy Humber in Bushehr via the Moscow newsroom at yhumber@bloomberg.net; Ladane Nasseri in Tehran at lnasseri@bloomberg.net.

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