Trump Announces Nuclear Energy Agreement with Saudi Arabia, with Caveat

Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

Summary

U.S. President Donald Trump announced a nuclear power cooperation agreement last week with Saudi Arabia. Congress has 90 session days to review or object. Trump later announced on social media that the agreement hinges on Saudi Arabia normalizing relations with Israel.

Deal or No Deal?

The Trump administration announced on Wednesday that the U.S. and Saudi Arabia had signed a nuclear power cooperation agreement and a bilateral safeguards agreement.

Later, on social media, President Donald Trump added a condition--that finalizing the deal "is totally subject to Saudi Arabia joining the very respected and successful Abraham Accords." The U.S. brokered the accords in 2020, normalizing relations between Israel and several Middle East nations, including the United Arab Emirates (UAE) and Bahrain. But Saudi Arabia has refused to sign the accords unless there was a pathway to Palestinian statehood.

According to Industrial Info Resources data, there are four current nuclear energy projects in Saudi Arabia, with a total investment value of $17.6 billion, and total generation capacity of 4,400 megawatts (MW). The Industrial Info Resources Global Market Intelligence (GMI) Power Project Database offers detailed project reports.

Two projects, 100 MW each, are in the detailed design phase, involving KA-Care with the Korea Atomic Energy Research Institute (KAERI), KEPCO Engineering and Construction (E&C) and Korea Hydro and Nuclear Power (KHNP). Also, a 1,400-MW plant is in the site study phase; and the fourth, with 2,800 MW expected capacity, is in preliminary design.

Industrial Info Resources data says the Saudis' current nuclear projects are part of a long-term objective extending through 2040, to construct 16 nuclear power reactors

with total capacity of 17 GW.

Here's the Deal

The U.S. Department of Energy (DOE) said the cooperation pact, known as a 123 agreement, "provides great access for American companies in the Saudi nuclear energy program, benefiting American industry, workers, and supply chains while helping to meet Saudi energy needs."

The 30-year deal would give American companies priority in supplying nuclear reactors and technology, according to news accounts, and would include a bilateral safeguards plan.

But details of the agreement were sketchy, raising questions over whether Saudi Arabia would be allowed to enrich uranium as fuel for nuclear power plants.

Although it is among the world's top producers of oil, the nation has been looking to add a nuclear program for many years. The DOE said the country's nuclear program could last for decades and be worth billions of dollars.

What Is a 123 Agreement?

This refers to a 2009 agreement between the U.S. and the UAE, named after Section 123 of the U.S. Atomic Energy Act. That pact established a strict legal framework for the United States to transfer nuclear technology, materials and equipment to the UAE.

Therein the UAE agreed to forego domestic development of uranium enrichment operations and spent fuel reprocessing capabilities, relying instead on long-term international suppliers for nuclear fuel. It also agreed to transparency and oversight by the International Atomic Energy Agency (IAEA).

Because of its strict protocols, the 123 agreement is informally known as the "gold standard."

One Thing Israel and Iran Agree On

Understandably, there is some significant opposition, both in the U.S. and among certain international players. At this point, both Jerusalem and Tehran are against the idea, but for different reasons.

The Jerusalem Post reported that some Israeli officials are concerned that the plan lacks enough safeguards to prevent the Saudis from enriching uranium to where it could be used in nuclear weapons.

Plus, the fact that the original agreement failed to require normalizing Saudi-Israeli relations was an issue for them. Those negotiations stretched back through both the previous Trump administration and the Biden administration. The Jerusalem Post reported that negotiations had been in full swing until the October 7, 2023 Hamas-led attacks on Israel.

That stipulation has now been added, and so far, the Saudi government has not responded publicly.

Iran, on the other hand, strongly objects to any U.S. nuclear involvement in the Persian Gulf. The Saudis have previously warned that any significant Iranian progress toward nuclear weapons would be followed by their own entry into the arena, in self-defense. Al Jazeera reported that the Iranians fear this agreement could put the Kingdom closer to readiness for that prospect.

Al Jazeera also finds it ironic that the U.S. is set to promote nuclear development in Saudi Arabia while attacking Iran for doing exactly that.

What's Next

The Saudis have yet to comment on whether they plan to agree to the Israeli normalization requirements. In the U.S., Republican margins are thin in both houses, and only a few defections could prevent approval. Both houses must approve for the agreement to stand.

By the Numbers

• 90 Session Days: Length of time U.S. Congress has to respond to the deal
• 30 Years: Length of the agreement, if approved
• 17 GW: Amount of nuclear power projects in Saudi's proposed plan

Key Takeaways

• The agreement could be a major step toward energy diversification for Saudi Arabia.
• But two hurdles remain before approval: a U.S. Congress vote, and Saudi agreement to normalize relations with Israel.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).