ABU DHABI NUCLEAR POWER AUTHORITY CONCERNED THAT USG VIEWS

C O N F I D E N T I A L ABU DHABI 000974

SIPDIS

DEPARTMENT FOR NEA/ARP BMASILKO AND ISN/NESS ABURKHART/ASTUKALIN

E.O. 12958: DECL: 08/28/2018
TAGS: PARM ENRG PGOV PREL KNNP AE
SUBJECT: ABU DHABI NUCLEAR POWER AUTHORITY CONCERNED THAT USG VIEWS
COULD DISADVANTAGE US FIRMS

REF: 08/26/2008 COOPER/STUKALIN EMAIL

Classified by Charge d'Affaires Martin Quinn, Reasons 1.4 (b,d).


1. (C) Summary: Emirates Nuclear Energy Corporation officials told
Emboffs August 27 that they were concerned that comments attributed
to USG officials could disadvantage US private sector participation
in the UAE's nuclear energy program. Officials stressed that they
hope to see strong US participation in the multi-billion dollar
project and are very interested in US technologies. The UAE hopes to
finalize a 123 Agreement with the US by year-end in order to ensure
US firms are not disadvantaged "politically." EconOff assured ENEC
officials that the USG was following the tenders carefully and hoped
to see strong US business participation in the UAE nuclear program.
End summary.


2. (C) Officials associated with the Emirates Nuclear Energy
Corporation (ENEC) told A/DCM and EconOff on August 27 that they were
concerned by comments a third party had attributed to unnamed senior
State Department officials about US participation in ENEC's nuclear
power program. Executive Affairs Authority Director of Economic
Affairs David Scott said that an unidentified private sector entity
told ENEC that a Department official believed ENEC had already
decided to select French nuclear technology for a multibillion dollar
contract to build several nuclear power plants in the UAE. According
to this erroneous view, American participation might be limited to a
token consultant arrangement to "balance out the flags" involved in
the project. Scott said that he understood French statements to this
effect in January had been misleading, and were frequently recycled
in the press to the confusion of many, but asserted that senior UAEG
officials had strongly reprimanded the French and made every effort
to clarify the transparency of the bidding process. In fact, Scott,
ENEC Acting CEO Mohamed Al Hamadi, and MFA Special Representative for
International Nuclear Cooperation Hamad Al Kaabi confirmed that ENEC
is seriously considering US nuclear technology and hopes that US
firms will be competitive bidders for contracts related to Abu
Dhabi's plan to build a "fleet" of nuclear power reactors. Al Kaabi
was "eager" to team up with US technical expertise and Scott hoped
the Department was not signaling "political surrender" in the bidding
process. EconOff assured the group that the Mission and the USG are
very hopeful US firms will participate in the program.


3. (SBU) Al Kaabi explained that ENEC is still planning to award the
billion dollar "Managing Agent" [Project Manager] contract by the end
of 2008 and that several US firms have already been short listed for
this contract. Al Kaabi said that ENEC must develop a shortlist of
bidders on the separate multi-billion dollar technology award
anticipated in March 2009 and award the contract by the end of 2009
if it is to meet its goal of nuclear power generation by 2017.
(Note: The exact value of the contract will depend on the number of
plants ultimately constructed to meet growing UAE electricity demand.
End note.) ENEC officials said that they were eager to have a
dialogue with possible US bidders and had already begun discussions
with GE. They stressed that the selection of light water technology
was indicative of their interest in US participation, as well as the
UAE's non-proliferation objectives.


4. (C) Scott noted that the timely finalization of a 123 Agreement
with the United States would have a direct impact on the
competitiveness of US firms. The technical shortlist would be based
on logistical risk, commercial risk and political risk (assurance of
continued access to technology and fuel). Scott said the UAEG's
revisions (e.g., regarding unilateral termination) to the proposed
123 Agreement text were intended to reduce the political risk
associated with selecting a US contractor. The UAEG hopes the
agreement will be "durable" and take into consideration its long-term
waste storage concerns and future technological developments related
to reprocessing. However, Scott said the UAEG was open to US
counterproposals that would address these issues. For example,
Scott said limiting (and specifically identifying) the countries in
which the UAE would seek to reprocess its fuel may be an acceptable
alternative. ENEC officials stressed that they hoped to conclude a
123 Agreement with the United States, and similar agreements with 1-2
other countries (e.g., Japan and perhaps South Korea) by the end of
2008 in order to stick to the project timeline.
QUINN