Russia and Turkey Close to Signing $80 Billion of Nuclear Power Development and Supply Deals

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Researched by Industrial Info Resources (Sugar Land, Texas)--Russia and Turkey are close to finalizing a nuclear power project deal that would see the former developing and operating four AES-2006 VVER nuclear power reactors with a generation capacity of 1,200 megawatts (MW) each in Turkey at a total cost of $18 billion to $20 billion. In addition, the two countries are also in talks about a power supply deal valued at $60 billion that would see the Turkish government agreeing to purchase power from the project for a period of 15 years.

In September 2008, a consortium of Atomstroyexport (Moscow, Russia), a nuclear power equipment and service provider; Inter RAO UES JSC (RTC:IRAO) (Sochi, Russia); an energy firm engaged in the production and distribution of thermal power; and Park Teknik AS (Ankara, Turkey), Turkey's largest private producer of coal, emerged as the sole bidder for Turkey's first nuclear power plant, which will be developed near Mersin in the Akkuyu district on the Mediterranean coast. The consortium initially proposed a tariff of U.S. 21.16 cents per kilowatt-hour (kWh) of power generated for construction and management of the power plant. Analysts described the tender as disappointing since several local and international firms had previously expressed interest in the project but did not submit bids.

The consortium led by Atomstroyexport submitted a revised offer of U.S. 15.35 cents per kWh for construction and operation of the project. The revised bid is being assessed by Turkey's Atomic Energy Authority. If approved, the project would be developed on a build-own-operate basis, with the power project being financed by private players under the aegis of the state's guarantee to purchase energy. While construction and development of all four nuclear reactors is expected to take about 10 to 12 years, the first unit is likely to be commissioned in 2016.

According to a recent report published by Business Monitor International (London, United Kingdom), Turkey is expected to account for 10.76% of the regional power generated in Central and Eastern Europe (CEE) by 2013. In 2007, thermal power generation in Turkey was nearly 147,000 gigawatt-hours (GWh), accounting for 11.36% of the total thermal power of 1.294 million GWh generated in CEE. Turkey's contribution is expected to rise to 13.73% by 2013. Energy demand in the country is expected to increase to 1.672 million tons of oil equivalent, registering a growth of 22.84% from 2007.

Overall power generation in Turkey is expected to grow at an annual rate of 6.5% from 2007 to 2013. Power consumption is expected to rise from 147,800 GWh in 2007 to 176,700 GWh in 2013. Electricity exports are estimated to increase from 43,100 GWh to 96,700 GWh during this period.

According to the report, power generation in Turkey is set to increase by 72.5% between 2007 and 2018, with a larger increase of 41.8% in the first half of the forecast period, 2007 to 2013, and a relatively smaller increase of 20.5% in the second half of the forecast period, 2013 to 2018. During the entire period of 2007 to 2018, hydropower generation in the country is expected to increase by 100% and thermal power generation is expected to rise by 67.4%.

On his first visit to Moscow earlier this week, Turkish President Abdullah Gul signed a joint declaration with Russian Prime Minister Vladimir Putin for cooperation in the nuclear energy sector among several other factors in order to strengthen bilateral relations. In 2008, bilateral trade between Russia and Turkey amounted to $37.8 billion. This is expected to increase to between $40 billion and $50 billion in the coming years. Turkey meets 63% of its gas requirements and 29% of its petrol requirements through imports from Russia. Nearly 50% of Turkey's power plants operate on gas, nearly 95% of which is imported.

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