Areva Consolidates in Qatar with $731 Million Transmission Contract

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Researched by Industrial Info Resources (Sugar Land, Texas)--Some concerns have been voiced in Europe and North America about sovereign funds (state-controlled) from the Middle East and Asia acquiring large chunks of equity in companies that are in strategically key industrial sectors. This concern is balanced out by the fact that top sovereign salesman (presidents, prime ministers, kings and queens) go east and close some hefty deals. What goes around comes around.

The west-to-east sales trip par excellence was demonstrated by French President Nicolas Sarkozy on his recent trip to the Middle East, which saw a number of power sector deals clinched by the French nuclear and power company Areva.

Qatar Electricity and Water Corporation (Kahramaa), set to raise $30 billion in debt finance, to be invested in the expansion of its power and water sector, signed a $731 million contract with Areva's transmission and distribution division that covers the turnkey delivery of 14 gas-insulated substations plus the development and enhancement of the network in the Dohar region. The substations will connect various parts of the network, which may operate at different voltage levels. They also serve to control and transfer power flows, as well as transform voltage levels. Delivery is planned for the first quarter of 2010.

A second contract was signed covering the delivery of state-of-the-art technology to upgrade the national control center, the core of the country's power transmission system that was built by Areva in the 1990s.

With transmission and distribution set to take $15 billion to $20 billion of the total $30 billion to be invested over the next eight years, Areva is positioned to consolidate and increase its 20% of market share in the region. Kahramaa is planning to expand the country's generating capacity by 150% by 2015 to a total of 10,500 MW.

The French companies Areva (Paris), Total (NYSE:TOT) (Paris) and Suez have signed a partnership agreement to submit a nuclear power plant project to the United Arab Emirates (UAE) with local partners involved. The proposal will cover an integrated nuclear power generation solution with two 1,600 MW EPR reactor units and fuel cycle products and services. The UAE has still to react officially to the proposal. Total would contribute management expertise gained in the region. Suez would use its expertise as a nuclear power plant operator. Total and Suez are already partners in power generation and desalination in the UAE. Areva, which has the capability to integrate the whole nuclear cycle, would contribute its know-how covering nuclear islands and the complete fuel chain.

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