Tuesday, March 06, 2007

Did China make a nuclear mistake?


Barely three months into the biggest nuclear deal in history, cracks are already beginning to appear. China will award a contract to build two nuclear reactors in southeastern China to France's Areva.

Westinghouse originally won a $5.3 billion agreement to build reactors at Yangjiang and Sanmen, after outbidding Areva and Russia's AtomStroyExport during almost two years of negotiation and lobbying. The companies are competing to build as many as 26 more reactors by 2020 as China turns to atomic energy to cut pollution and reliance on oil.

However, Paris-based Areva may now build the Yangjiang reactors, among four originally earmarked for Westinghouse, which will instead get a contract for two reactors at Haiyang in Shandong. China, which needs to add two reactors a year to meet a 2020 target of getting 4 percent of its power from nuclear energy from about 2.3 percent now, will also expand use of Russian technology for two reactors at the Tianwan Nuclear Plant in the eastern coastal province of Jiangsu. That might mean that Russia's AtomStroyExport may also get a piece of the pie.

This may not come as a surprise as many reasons could have motivated this move by China. Could it be their doubts over Westinghouse’s unproven technology? Or could the Russian deal be boosted by strong political ties between the two countries?

What do you think?