Vietnam signs nuclear reactor agreements with Russia and Japan 

The combined value of the two deals could be worth $11 billion

Russia and Vietnam signed a $5.6 billion deal Oct 31 to build two Russian VVER 1,000 MW reactors. In the same week Japan announced it is closing a deal with Vietnam to build two more reactors in the same power range. With the Russian reactors coming in at $2,800/Kw, the combination of the two deals could be worth $11 billion.

Vietnam has several strategic objectives for building the reactors.

First, it needs the electricity to support its growing manufacturing role as an exporter to the West. Intel announced Oct 29 it is opening a $1 billion microchip manufacturing plant, the biggest in the company's history.

Second, Vietnam has huge bauxite deposits, the world's third largest deposit, in its central highlands. It wants to develop a finished goods aluminum industry which requires a lot of electricity.

Third, Vietnam knows it cannot compete with China for Mideast fossil fuels. It needs electricity from uranium fueled nuclear reactors to power its economy.

What is even more interesting is that with all the hype about the potential for small modular reactors to do well in markets dominated by developing nations, Vietnam has chosen to go with full-scale reactors.

Russian deal

The contract with Russia is so important as a symbol of export success that the signature ceremony was attended in Vietnam by Russian President Dmitry Medvedev. Sergei Kiriyenko, head of Rosatom, which will deliver the reactors, told wire services the Vietnam deal is a signal to other potential customers they can do business with Russia for nuclear reactors.

A Russian official with the trade delegation said that Russia would provide a loan to help finance construction of the two reactors. Japan has a history of providing export credits to companies which build reactors overseas.

Japanese deal

Vietnam will sign a deal with Japan for two new nuclear reactors in the range of 1,000 MW each. The projects are part of a plan to build a total of eight nuclear reactors with the first Russian built units entering revenue service in 2020. The Ninh Thuan power station will be home to all four reactors with each one coming online a year after its predecessor. Vietnam's state-owned electricity utility will operate the plants. Vietnam has been training nuclear engineers in Japan for several years in anticipating of the new nuclear build program.

According to the English language Vietnam news service, the country's nuclear power plants will be built in the central coastal province of Ninh Thuan, with Plant No. 1 located in Vinh Truong, a seacoast peninsula south of Nha Trang. The reactors will receive large components and fuel assemblies by sea barge.

The Ninh Thuan Plant No.1 is designed to have four 1,000-MW turbines to produce 4,000 MW. It will used imported nuclear fuel. Vietnam has said it has no plans to develop its own uranium enrichment capabilities.

Russia has agreed to take back spent fuel from the reactors it builds in Vietnam. Japan can be expected to do the same as it already is committed to recycling spent nuclear fuel and the manufacture of MOX fuel.

Impact on the G-20 meeting

The Russian and Japanese deals come only week before the G-20 meeting is expected to take place in Seoul, South Korea.  The deals are a de facto message to the West that the nuclear renaissance is taking place in Asia. 

U.S. President Obama is expected to attend the G-20 meeting following a visit to India. It is unlikely U.S. firms will make much headway with India's nuclear market given the high bar the country's parliament set for suppliers with a new nuclear liability law. President Obama had hoped to announce several nuclear deals during his visit, but Indian diplomats say their country won't budge on the liability law.

Another contentious G-20 topic will be whether the U.S. will agree for South Korea to reprocess spent nuclear fuel. Talks ahead of the meeting are underway. South Korea is determined to change a two-decade old nuclear technology trade deal with the U.S. to begin fuel reprocessing.

In December 2009 South Korea signed a $20 billion deal with the United Arab Emirates (UAE) to build four 1,400 MW KEPCO reactors in that country. As part of that deal, the UAE said it would not develop uranium enrichment nor fuel reprocessing capabilities.

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