U.S. Seeks Investments With Saudi Arabian Nuclear City

The U.S. is seeking nuclear-power opportunities in Saudi Arabia as the world’s largest oil supplier develops alternative energy to meet electricity demand.

U.S. companies are “interested in partnering with the Saudis in the civil nuclear space,” Francisco Sanchez, the undersecretary for international trade at the U.S. Department of Commerce, told reporters in Riyadh yesterday. Saudi Arabia is “making a serious commitment” to alternative energy, he said.

The Arab world’s biggest economy announced in April that it was building the King Abdullah City for Nuclear and Renewable Energy in Riyadh as economic expansion increases power demand by 8 percent a year. The U.S. government agreed in 2008 to help Saudi Arabia develop its civil nuclear-power industry.

Sanchez is leading a delegation of executives from companies including General Electric Co., Shaw Group, First Solar Inc. and Elkhart Products Corp. as part of President Obama’s efforts to increase exports to Saudi Arabia, according to a U.S. Commerce Department statement. Sanchez accompanied 11 companies to the kingdom in June.

The U.S. increased its trade with Saudi Arabia by 6 percent for the first three quarters this year, compared with the same three quarters in 2009, Sanchez said. U.S. exports to Saudi Arabia were $10.8 billion in 2009, according to data on the website of the U.S.-Saudi Arabian Business Council.

$400 Billion

Shaw Group, Toshiba Corp. and Exelon Nuclear Partners, a unit of Exelon Corp., teamed up to pursue nuclear power contracts in Saudi Arabia. The group wants to provide engineering, procurement, construction and operations for nuclear power plants, the companies said in July.

Saudi Arabia, home to about a fifth of global crude oil reserves, is spending $400 billion over a five-year period, announced in late 2008, to build infrastructure, expand alternative-energy production and boost economic growth. Saudi Arabia also approved a five-year, $384 billion development plan in August, SPA reported on Aug. 9.

The kingdom is “doing it in large part because it is an existing, established, cost-competitive technology that enables large-scale production,” Jarmo Kotilaine, chief economist at NCB Capital in Riyadh, said in response to e-mailed questions.

Saudi Arabia, lacking natural-gas supplies to meet domestic demand, is burning oil in plants to power its economic growth.

“If they use oil for all of that, they lose revenue that they could otherwise get by selling it or by using it in a more productive way than just simply generating electricity,” Sanchez said. “They seem to be very committed to having civil nuclear as part of what generates energy for them, and to do it relatively quickly, like within the next 10 years.”

Gulf Power

Saudi Arabia is one of several Gulf Arab countries seeking to develop nuclear energy. The United Arab Emirates awarded a $20 billion contract in December 2009 to a group of companies led by Korea Electric Power Corp. to build four nuclear plants, and Kuwait plans to build four reactors by 2022.

Saudi Arabia announced plans to join the Vienna Convention on Civil Liability for Nuclear Damage, the official Saudi Press Agency reported in November.

“They are being transparent in their efforts so they can show Iran how to conduct themselves publically,” Theodore Karasik, director of research at the Dubai-based Institute for Near East and Gulf Military Analysis, said in response to e- mailed questions.

Iran says it is producing uranium to fuel atomic reactors. The U.S. and Europe say Iran is trying to build nuclear weapons.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.