The United Arab Emirates said Sunday that it had chosen a South Korean-led consortium for a $20 billion contract to create the first nuclear power reactors in the Middle East.
The Korean consortium beat out a General Electric-Hitachi team and a French consortium that included Électricité de France and Areva.
The deal, one of the largest in the energy sector this year, comes amid a resurgence of nuclear power projects and had involved prominent lobbying from officials including the presidents Nicolas Sarkozy of France and Lee Myung-bak of South Korea.
The deal went forward after the emirates signed an agreement with Washington on Dec. 17 to alleviate proliferation concerns. The Arab country, a federation of seven Persian Gulf principalities, agreed in that protocol that it would not enrich uranium or reprocess spent fuel.
After a decade of strong growth, the emirates, a leading oil producer, is seeking to modernize its utilities sector and diversify its energy sources. It import!s most of the natural gas that it burns to generate electricity and using its own oil would reduce amounts available for export.
Under the deal announced in Abu Dhabi on Sunday, Korea Electric Power will lead a group that includes Westinghouse, the American subsidiary of Toshiba, in designing, building and helping to operate four 1,400-megawatt nuclear power plants for the Emirates Nuclear Energy Corporation. The first of the third-generation units is planned to be online in 2017, with the others providing electricity to the grid by 2020.
The contract had been hotly contested. The deal could be worth as much as $40 billion if the initial four plants are successful and the arrangement is extended.
“The nature of this project will require a partnership that endures for nearly 100 years,” Khaldoon al-Mubarak, chairman of corporation, said in a statement announcing the winning bid.
The Korean consortium agreed to take “a high percentage” of the contract under a fixed-price arrangement, an important consideration in an industry in which major cost overruns are the norm. Korean investors will also take an equity interest in the project, which will be modeled on the South Korean utility sector.
The task is nonetheless a daunting one. Essentially all of the technical expertise and much of the manual labor will have to be brought in from abroad, as will the reactor components and the fuel. The emirates’ electrical grid will also have to be substantially improved.
Emirate officials said they were still discussing cooperation with the other bidders in areas like long-term fuel supply, investments and training.
The Korean group also includes Doosan Heavy Industries and Construction, Hyundai Engineering and Construction and Samsung C&T. Korea Electric Power, owned by the South Korean government, operates 20 nuclear plants, generating about 40 percent of the country’s electricity. The contract is its first big export deal.
“We can now stand shoulder to shoulder with the U.S., Japan, France and Russia in our advance into the international market,” the Yonhap news agency quoted Mr. Lee, the South Korean president, as saying.
Despite the nonproliferation agreement signed with Washington, there remains concern in some quarters about the security of nuclear facilities in the emirates, which lies in a volatile region just across the gulf from Iran. Emirate nuclear authorities are eval!uating potential sites for the plants.
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