China close to deal on French reactors

BEIJING, CHINA - China will award a contract to build two nuclear reactors in southeastern China to Areva of France, a Chinese official said recently.

The two sides are working on a final accord to build the reactors at Yangjiang in Guangdong Province, Qian Jihui, a senior adviser at China National Nuclear, the country's top nuclear reactor builder, said in Beijing. The contract was originally awarded to Toshiba's Westinghouse Electric, which will instead get an agreement for two other reactors in Shandong Province.

China needs to add two reactors a year to meet a 2020 target of getting 4 percent of its power from nuclear energy, against about 2.3 percent now. Areva and Westinghouse 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.

"Awarding the contracts to two companies will give China more room in later negotiations," said Yan Shi, a Shanghai-based analyst with Core Pacific Yamaichi International.

The parties will sign a final agreement "very soon," Qian said at the National People's Congress, without giving specific reasons for the decision to award the contract to build the reactors to Areva instead of Westinghouse.

Westinghouse originally won a $5.3 billion agreement on December 16 to build reactors at Yangjiang and Sanmen, after outbidding Areva and AtomStroyExport of Russia following almost two years of negotiation and lobbying. President Jacques Chirac of France promoted Areva's bid when he met with his Chinese counterpart, Hu Jintao, during a visit to Beijing in October.

China plans to import uranium from Australia, Canada, South Africa and Kazakhstan to fuel its expanding nuclear power capacity, Qian said. China has nine reactors operating in Zhejiang and Guangdong. Six are under construction in Jiangsu in the east and in Guangdong. These projects have a combined capacity of about 12,000 megawatts.

Beijing plans to use Russian technology for two reactors at the Tianwan nuclear plant in the eastern coastal province of Jiangsu, Qian said.

"China and Russia have a close relationship," he said. "Awarding nuclear reactors could be a deal boosted by political ties."

Xu Damao, a senior consultant to the project operator China Guangdong Nuclear Power Holding, said February 13 that the Paris-based Areva might build the Yangjiang reactors, among four originally earmarked for Westinghouse, which instead gets a contract for the two reactors at Haiyang in Shandong.

Westinghouse, based in Monroeville, Pennsylvania, will provide technology for reactors at Haiyang and Sanmen, Yu Zhuoping, a senior official at State Nuclear Power Technology, a company designated by the government to hold talks with overseas reactor builders, said recently.

China is the third-biggest nuclear energy user in Asia, after Japan and South Korea, according to the 2006 BP Statistical Review of World Energy.