• 1 day PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 1 day Syrian Rebels Relinquish Control Of Major Gas Field
  • 1 day Schlumberger Warns Of Moderating Investment In North America
  • 1 day Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 1 day Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

New Tech Is Transforming Japan’s Energy Sector

The tech that built bitcoin…

Alt Text

This OPEC Strategy Could Boost Uranium Prices Next Year

Kazakhstan, the world’s largest uranium…

Alt Text

Rising Costs Slow The Growth Of Nuclear Power

High costs and public fears…

Viktor Katona

Viktor Katona

Viktor Katona is an Group Physical Trader at MOL Group and Expert at the Russian International Affairs Council, currently based in Budapest.

More Info

Russia’s Nuclear Sector Is Surging


The nuclear sector is undergoing a massive transformation...

Regions previously in the avant-garde of nuclear design and technology are losing interest on the back of a post-Fukushima scare, while new regions—with Asia and Africa in the forefront—set their sights on nuclear.

Yet Russia, a country with a long-standing nuclear tradition (63 years ago it was the first ever to generate electricity for a power grid at the Obninsk nuclear plant) is still keen to remain in the game. Moscow wants to make use of its rivals’ weakness and magnify its market share. In contradiction to the tenets of mainstream economics, the rise of Russia’s Rosatom State Atomic Energy Corporation came about as a result of massive state centralization and unification.

Ever since the creation of Rosatom in December 2007, under the aegis of which more than 350 business units were merged to form a single nuclear holding, the stagnation of the 1990s and early 2000s came to a halt. Gradually clinching one deal after another, the water-parting line of Rosatom’s international surge can be put down to 2014 when the company’s international reactor-building portfolio grew from 19 to a massive 29.

Currently, roughly 60 nuclear reactors are being built all over the planet. Of them, Rosatom is constructing more than 20 abroad, on top of the 7 that the Russian company currently erects at home.

It must be noted that most of the plants being constructed now are replacing older ones, yet this in itself is a sign of change, as most of Russia’s RBMK nuclear portfolio was built in the 1970s and was bound to be decommissioned at some point of the previous decade. Related: Russia And China Continue To Boost Oil Ties

Still, this is just a transitional assessment of the state of affairs in the nuclear industry where Russian preponderance in reactor sales and technical assistance will inevitably increase beyond the current 60 percent, as the Russian government has decreed the construction of 8 new nuclear plants (11 reactors) by 2030, to be carried out concurrently with Rosatom’s expansion on international markets.

The latest flurry of activity happened in Northeast Africa, where both Egypt and Sudan have signed up to the construction of Russian-designed and built reactors. Only two years have passed since the Egyptian and Russian prime ministers concluded a deal on the construction of four nuclear units at the Dabaa site, and statements of high-ranking officials indicate the two sides might enhance their nuclear cooperation by agreeing on the construction of a second nuclear plant.

Rosatom is also set to build Sudan’s first-ever nuclear plant. Preliminary surveys to determine the construction site began in September.

Russia’s technological advances add to Rosatom’s expansion plans. The company brought out six different types of reactors in the last 20 years, while Westinghouse, the American nuclear flagship, brought out only one during double that time.

Apart from pressurized water reactors, sodium- and lead-cooled fast reactors, Rosatom is also finishing off with the implementation of the world’s first-ever floating nuclear power station, to be used along Russia’s Arctic coast; the first will be brought online in late 2019, near the Chukchi Peninsula port of Pevek.

In order to understand the reasons behind Rosatom’s growing stature, one has to look at the terms and conditions the new construction deals were consummated on. In this, Rosatom is fully taking advantage of the fact that it remains the only nuclear company that can guarantee a full-cycle development of nuclear plants. There’s more to it, however, as Moscow’s realization that it can generate hefty profit from a nuclear renaissance helped significantly to finalize the deals. Related: Has The Bear Market In Oil Finally Ended?

The main tenets of Rosatom’s success are as follows:

1. Financial Flexibility and Backing

The financial backing of Rosatom’s deals represents one of its main competitive advantages. For instance, by granting Bangladesh an $11.38 billion loan, Russia pre-financed 90 percent of the total costs to be incurred during the construction of the Rooppur nuclear plant. Bangladesh will start repaying the debt in 2027, over a 20-year period, effectively three years into the plant’s commission. Since the credit terms are relatively mild (6-month LIBOR + 1.75 percent), Dhaka was wise to not let go of such an opportunity.

Similar mechanisms were employed in Rosatom’s Paks-II extension deal, where the Russian government granted Budapest a $10.8 billion credit, to be repaid only after the plant’s commission, with a generous 4.5 percent interest rate (to be raised to 4.8 percent in the last 14 years).

Thus, the host countries are required to pay only when most risks have been already settled—a massive boon by any standards.

Vietnam ($8 billion credit) is another example, with Zambia, Sudan and Egypt likely to go down the same path.

2. All-encompassing “Package Deals”

Not only are Rosatom-offered deals financially advantageous, but they’re also lucrative due to their all-encompassing nature. Apart from its uranium production and enrichment activities, it also caters to the partners’ NPP construction, engineering and power generation. Moreover, it contractually obliges itself to take care of all nuclear waste.

With its Akkuyu nuclear plant in southern Turkey, Rosatom went even further, by clinching a build-own-operate (BOO) model deal, under which Turkey would only pay a fixed $0.1235/KWh tariff adjusted to inflation for a duration of 15 years after the plant’s commissioning (to be renegotiated afterwards).

Schemes by which host governments only pay for the electricity and take no stake in the nuclear plant itself will most likely be used even more extensively in Rosatom’s African endeavors.

3. Weakness of Traditional Rivals

Rosatom’s centralization helped the company to weather a tumultuous period when its traditional competitors Westinghouse and Areva both filed for bankruptcy, with the latter being sold to utility company EdF.

Asian competitors also face difficult situations. The Korean KEPCO will inevitably suffer a blowback from a nuclear phase-out in South Korea, with similar prospects troubling the Japanese Hitachi. And Chinese nuclear companies are too reliant on Western or Russian technologies to pull off a market breakthrough.

This has caused considerable concern in American political strata, and Rosatom’s tangible expansion will sooner or later face a U.S. sanctions response. But it might be already too late at that point—with a $130 billion order book and the potential to raise it to $300 billion within the next few years, Rosatom is well positioned to withstand external pressure.

By Viktor Katona for Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News