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Iran, Dogged by Sanctions, Starts First Nuclear Plant

Aug. 21 (Bloomberg) -- Iran, under United Nations sanctions for its nuclear program, said it ended a 36-year quest to join the club of atomic-powered nations when Russia’s Rosatom Corp. switched on a reactor along the Persian Gulf coast.

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

Iran began loading the Bushehr plant with nuclear fuel, the state-run news channel Press TV said, showing images of Iranian and Russian nuclear officials inside the plant.

“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 today before the opening ceremony.

“Bushehr is a unique project globally,” said Rosatom Corp. Chief Executive Officer Sergei Kiriyenko, who attended the opening. “Given the 36-year wait the start up of Bushehr is a symbolic moment of Iran for us. It is important that Russia has shown that it stands by its obligations.”

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

Today, state-owned Rosatom began deliveries of the first fuel assembly to start the fueling process, under the supervision of the UN’s International Atomic Energy Agency. Kiriyenko joined Salehi in an inspection of the control room. Power generation that will account for less than 4 percent of Iran’s electricity will start in about three months.

Spent Fuel

Under Iran’s agreement with Moscow-based Rosatom, the Russian company will continue to supply uranium for the plant and take away spent fuel. Bushehr’s operations and fuel deliveries are monitored by the IAEA.

As long as Iran’s work is controlled by the IAEA and all international norms are maintained, a reactor such as Bushehr is acceptable, Kiriyenko, a former Russian nuclear agency chief, said in an Aug. 19 meeting with Prime Minister Vladimir Putin.

Salehi said yesterday that Iran’s goal is to produce enough enriched uranium at its Natanz facility to take over from Russia in fueling the Bushehr plant, according to the state-run Islamic Republic News Agency.

Iran’s insistence on enriching uranium 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.

No ‘Military Purposes’

“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.”

Iran introduced gasoline rationing in 2007 because it lacks refinery capacity to meet domestic needs, and has plans to cut fuel subsidies amid the sanctions.

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.

Ahead of Neighbors

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.

“There is a high element of prestige involved in such high-technology breakthroughs in Iran, which have been few in the last decades,” Khlopkov said.

Iran said this week it will pursue a third uranium-enrichment plant to add to Natanz and one being built at Qom. The country also defended the 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.

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.

Started by Germans

The Bushehr facility was contracted for in 1974 with 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.’ ”

To contact the reporters on this story: Yuriy Humber in Bushehr via the Moscow newsroom at; Ladane Nasseri in Tehran at

To contact the editors responsible for this story: Peter Hirschberg at; Amanda Jordan at

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