U/S JOSEPH AND EGYPTIAN MINISTER OF ENERGY DISCUSS

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 000474 SIPDIS SIPDIS STATE FOR NEA/ELA, T, ISN ENERGY FOR NNSA (TOBEY) NSC FOR WATERS E.O. 12958: DECL: 02/05/2017 TAGS: ENRG KNNP PARM EG SUBJECT: U/S JOSEPH AND EGYPTIAN MINISTER OF ENERGY DISCUSS PEACEFUL NUCLEAR POWER COOPERATION REF: CAIRO 296 Classified By: DCM STUART JONES FOR REASONS 1.4 (B) AND (D) ¶1. (U) February 3, 2007; 1030 hrs; Cairo, Egypt ¶2. (SBU) PARTICIPANTS: U.S. -------------- Under Secretary Robert Joseph Ambassador Ricciardone ISN Assistant Secretary John Rood T Senior Advisor Jim Timbie DOE/NNSA Deputy Administrator Will Tobey Economic Officer Kevin Roland (Embassy notetaker) EGYPT -------------- Minister of Electricity and Energy Hassan Younis Dr. Elsayed El Kattan, Chairman, Nuclear Materials Authority Dr. Aly Islam, Chairman, Egyptian Atomic Energy Authority Dr. Yassin Ibrahim, Chairman, Nuclear Power Plants Authority Mohamed Mousa Omran, Under Secretary for Minister's Office Affairs Abdel Rahman Salah, 1st Under Secretary, Ministry of Electricity ¶3. (C) SUMMARY: Under Secretary Joseph met with Minister of Electricity and Energy Hassan Younis on February 3 to discuss potential U.S.-Egyptian cooperation in Egypt's pursuit of peaceful, proliferation-resistant, nuclear energy. Younis, who is charged with laying the groundwork for this effort, is taking a serious, considered approach to the task, and will welcome U.S cooperation at stages commensurate with the GOE's organizational development on the issue. The completion of comprehensive energy assessment and nuclear feasibility studies, expected in 2007, will likely give the final, formal go-ahead for Egypt's pursuit of nuclear energy. END SUMMARY. -------------- COOPERATION WELCOMED -------------- ¶4. (C) During their February 3 meeting, Under Secretary Joseph and Egyptian Minister of Electricity and Energy Hassan Younis explored potential avenues of cooperation on proliferation-resistant nuclear power development in Egypt. Affirming the desire of the United States to cooperate in this shared goal, the Under Secretary detailed our discussions with international partners, including Russia, related to the Global Nuclear Energy Partnership (GNEP),and extended an invitation for the Minister to visit the U.S. for high-level discussions with U.S. agencies. Minister Younis welcomed the invitation, expressed his desire to pursue cooperation, and said he hoped that Egypt would soon be in a position, organizationally speaking, to achieve the most benefit from U.S.-Egyptian exchange. Younis said that, despite press speculation, Egypt has still not yet definitively chosen the nuclear option as important studies remain to be completed. -------------- LAYING THE GROUNDWORK -------------- ¶5. (C) According to the Minister, the GOE is currently undertaking the following steps to prepare a solid foundation for the nuclear power effort. His hope is that by the end of 2007 Egypt will have a "clear picture" of where it needs to be headed: -- COMPREHENSIVE ENERGY ASSESSMENT: The GOE will sign a contract, likely in February 2007, with Bechtel subsidiary Nexant to conduct a multi-sectoral and comprehensive study of Egypt's anticipated energy needs until the year 2030. The study will examine Egypt's current resources (to include hydrocarbon, wind, solar, and hydro),forecast the future needs of the domestic, transport, and industrial sectors among others, and recommend a national course of action, which may include nuclear power. Minister of Petroleum Sameh Fahmy will shepherd the study. Younis said the Supreme Council on Energy will review the study and eventually release it to the public. U/S Joseph said the U.S. would like to contribute to the study, and stressed the importance and value of IAEA participation given their role of promoting CAIRO 00000474 002 OF 002 safe nuclear energy. -- NUCLEAR FEASIBILITY STUDY: Concurrent with the Energy Assessment, the Ministry of Electricity and Energy will work to complete its own nuclear energy feasibility study that will tackle grid capacity and distribution issues in addition to economic aspects of going nuclear. Younis also acknowledged that Egypt does not yet have the human capital necessary to pursue nuclear power, and singled out manpower/skills development and safety as potential early priority areas for cooperation. -- NEW LEGISLATION: The GOE is currently preparing a draft "Nuclear Act" to clarify the legislative and legal framework for nuclear power development. He did not offer a timeline for completion of this effort. -- IAEA ASSISTANCE REQUEST: The Ministry of Electricity and Energy has formally requested IAEA technical support in the areas of plant site selection (particularly a re-evaluation of the El Daba'a site) and National Center for Nuclear Safety and Radiation Control (NCNSRC) augmentation, as well as input into Nexant's Energy Assessment project. -------------- FUEL SUPPLY CONCERNS -------------- ¶6. (C) Younis said that the U.S. or other countries looking to engage Egypt in GNEP-like structures must provide a fuel supply free of political pressures. (Note: The idea of who will control the fuel supply has already found its way into the public debate, with some Egyptian commentators calling for independence from foreign control. End note.) "If Egypt and the other potential countries feel comfortable about the fuel supply," he said, they will have no interest in sensitive fuel cycle activities. -------------- ELECTRICAL SECTOR RESTRUCTURING -------------- ¶7. (SBU) In addition to work on the nuclear portfolio, Minster Younis is moving forward with the overall restructuring of the Egyptian electrical power sector, including a revised draft of the Electricity Act that Younis said should be before the People's Assembly within two months. The draft will address issues of competition and investment in the sector, and formalize goals for renewable energy. -------------- COMMENT -------------- ¶8. (C) While the Minister claims that Egypt's course regarding nuclear power has not yet been decided, rampant growth in electricity consumption -- over 10 percent last year -- and finite hydrocarbon resources are pushing Egypt toward nuclear energy development. We understand that Younis has made this case directly to the Supreme Council for Energy, and it is likely to be supported by the comprehensive Energy Assessment study. Younis' words and actions thus far indicate a serious, technocratic, and considered approach to the nuclear power question, separate from the politically-charged public debate sparked by Gamal's speech in September 2006. RICCIARDONE