As the West prepares economic sanctions against Russia for its actions in Ukraine, the head of the government-owned State Atomic Energy Corporation (Rosatom) nuclear complex, Sergei Kirienko, said that Russia’s nuclear industry contracts with other countries could be affected, observing, “Considering an array of comments about possible restrictions on economic cooperation, we understand that some of our [international] contracts could fall under political curbs” (RIA Novosti, March 27). Kirienko added that Rosatom is bidding on international tenders for constructing nuclear power plants (NPP) in an environment of fierce political competition from the United States, with the State Department lobbying for Westinghouse to receive contracts.
According to Rosatom overseas head, Aleksei Kalinin, outside of the post-Soviet space Rosatom currently conducts business in Finland, Sweden, the Netherlands, Belgium, Germany, France, Spain, the United Kingdom, Switzerland, the Czech Republic, Slovakia, Hungary, Lithuania, Bulgaria, Slovenia, Turkey, Libya, Morocco, Algeria, Egypt, Iran, Jordan, Venezuela, Argentina, Brazil, Namibia, South Africa, Tanzania, China, Japan, South Korea, Vietnam, India, Bangladesh, Mongolia, Australia, Canada, Mexico and the US. Kalinin observed, “All strategic decisions at Rosatom now have only one goal—the globalization of business” (Rosatom, June 9, 2012). Worldwide, Russia’s nuclear expertise in NPP construction, combined with lower costs and generous loans are an integral part of Russian “soft power.” Thus, Western-led sanctions against the Russian nuclear sector could have profound implications.
In 2010, Rosatom signed contracts for the construction of 12 foreign nuclear power plants and in 2011, Rosatom signed an additional 21 contracts, despite global anxieties over that year’s nuclear disaster at Fukushima, Japan. Rosatom says it now has contracts to build 20 foreign NPPs and is examining another 40 proposals with foreign partners, doubling its orders for new plants since Fukushima (Interfax, October 22, 2013; Engineering News-Record, February 20, 2014).
However, worsening relations with Ukraine have already affected Russian nuclear activities there and other parts of Europe. On January 28, Ukraine’s State Nuclear Regulatory Inspectorate banned the shipment of Rosatom subsidiary TVEL’s nuclear fuel cycle products by rail across Ukrainian territory, which were destined for Bulgaria’s Kozloduy NPP. Subsequently, on March 5, Rosatom issued a statement noting that “TVEL will carry out all its fuel supply commitments to foreign NPPs. This can be achieved using an alternative licensed mode of transport, i.e. by air” (Rosatom, March 5). Indeed, Rosatom declared that it plans to keep supplying with nuclear fuel all foreign nuclear plants it has contracts with, even those in Ukraine.
Given Bulgaria’s energy dependence on Russia—it is also 100-percent reliant on imports of Russian natural gas—it is highly unlikely that Sofia would agree to more than symbolic sanctions against Russia, even though it is a member of both the North Atlantic Treaty Organization (NATO) and the European Union. Other EU states—the Netherlands, Belgium, Germany, France, Spain, the United Kingdom, the Czech Republic, Slovakia, Hungary, Lithuania and Slovenia—also have significant business dealings with Rosatom, and the majority of them are, therefore, also unlikely to sign up to the extensive sanctions agenda being promoted by the Barack Obama administration.
Yet, in the end, if US sanctions extend to include the Russian nuclear industry, one of the biggest losers could well be the US nuclear power industry itself.
In 2012, Russia supplied 13 percent of the uranium purchased by owners and operators of the 104 NPPs based in the United States (US Energy Information Administration, August 28, 2013). However, according to the US government’s National Nuclear Security Administration, about half of the fuel now used in domestic NPPs comes from dismantled Soviet warheads purchased under a 1994 contract that set aside $12 billion for the “Megatons to Megawatts” program (National Nuclear Security Administration Press Release, June 24, 2013).
Uranium, unlike other energy commodities in the global market, is not traded freely. Currently about 14 percent of the world’s uranium is sold via the spot market, while long-term contract pricing accounts for the remaining 86 percent. This benefits consumers as it locks in long-term prices to the detriment of producers (http://www.eia.gov/uranium/marketing/). If the United States imposes sanctions on the Russian nuclear industry or, conversely, if Russian President Vladimir Putin halts enriched uranium and plutonium shipments to the US, then US NPP operators will be hard pressed to make up the shortfall.
Sanctions would reverse Washington’s earlier policy of increased cooperation with Russia’s nuclear industry for US nuclear power companies. As part of efforts to strengthen bilateral cooperation, three years ago, the US Department of Commerce said in a statement that it acknowledged Rosatom as Russia’s chief nuclear power agency and that it had removed Rosatom from the list of companies whose activities were restricted in the United States. The Russian firm would no longer be required to obtain a special license from the Commerce Department to cooperate with US-based companies (“Removal and Modifications for Persons Listed Under Russia on the Entity List,” Federal Register Notice 76 FR 29998, May 24, 2011).
Furthermore, Russia also supplies enrichment facilities to convert uranium to low-enriched uranium (LEU)—uranium enriched to 3–5 percent of the isotope U235—for use in US NPPs. In December 2011, Russia’s state-controlled nuclear equipment exporter Techsnabexport (Tenex) General Director Alexei Grigoriev said that Russia and the United States signed a $2.8 billion inter-governmental agreement contract for Tenex to provide uranium enrichment services for US uranium importers for 2013–2022, replacing the highly-enriched uranium (HEU) agreement that was signed in 1993 and expired in 2013 (RIA Novosti, December 21, 2011). The agreement followed the coming into force on January 11, 2011, of the US-Russian Agreement for Cooperation in the Field of Peaceful Uses of Nuclear Energy, valid for 30 years. All of these activities are presently at risk from expanded sanctions.
Consequently, among the hordes of lobbyists stalking Capitol Hill are now a number of anxious nuclear energy advocates, imploring Congress not to do anything rash by passing further sanctions on Russia.