Italy's Enel Moves Ahead in Russian Nuclear Partnership Race

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Italian energy giant Enel SpA (BIT:ENEL) (Rome) is looking like the frontrunner in the race to become the first foreign firm to own shares in a Russian nuclear power plant.

The company has signed a memorandum of understanding with Russia's electricity import-export regulating body Inter RAO UES (Moscow) for cooperation in the nuclear power sector, construction of new plants, technological innovation, energy efficiency, and distribution in Russia and other eastern European countries. The signing was overseen by Russian Prime Minister Vladimir Putin and Italian Prime Minister Silvio Berlusconi in Lesmo, Milan.

Of particular note is the new, planned nuclear plant at Kaliningrad, which is the first nuclear public-private partnership in Russia. The plant, located about 15 kilometres from the Russia-Lithuania border, will consist of two 1,170-megawatt (MW) units of and will use third-generation VVER 1200 reactor technology. The facility is expected to begin operations between 2016 and 2018, with the majority of the generated electricity designated for export to nearby European countries.

Last September, Russia expressed its interest in offering a stake of up to 49% in the new Kaliningrad facility to companies in nearby Poland, Germany and Lithuania. This was the first time that non-Russian companies were invited to partner on a nuclear project. For additional information, see related news item from September 1, 2009 - Russia Offers 49% Stake in Kaliningrad Nuclear Power Project to European Neighbours. Other European companies expressing an interest included Iberdrola Ingenieria y Construccion SA (Bilbao, Spain), a subsidiary of Iberdrola SA (OTC:IBDRY) (Bilbao); Czech utility company CEZ AS (PRG:BAACEZ) (Prague); Enel and Fortum Oyj (HEL:FUM1V) (Espoo, Finland).

According to the agreement, Enel will study the technical, economic and regulatory aspects of the project "in order to evaluate the conditions and forms of its possible participation into the initiative." Enel has until July next year to decide whether it wants to formally join the project, which is expected to cost about 5.3 billion euro ($7 billion).

Enel is currently pursuing an aggressive, planned nuclear constructuion programme for Italy with Electricite de France SA (EPA:EDF) (EDF) (Paris, France). The companies recently launched a market survey to evaluate the abilities of Italian firms involved in the electronuclear technology industry. The pair will later start a tender process in 2011 for the construction of at least four Areva EPR-1600 reactors in Italy. This will be the first time that Italy will see new nuclear power plants built, following a 23 year ban. For additional information, see related news item from April 27, 2010 - Enel and EDF Move Toward First Biddings for Nuclear Projects in Italy.

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