PARIS: A top French minister and the chief executives of French utility EDF and reactor builder Areva are visiting Saudi Arabia this weekend to build a case for selling French nuclear reactors to the oil-rich country.
Industry Minister Arnaud Montebourg will meet with Saudi officials and with representatives of EDF and Areva, who opened a joint office in Riyadh six months ago to lay the groundwork for a French nuclear offer.
Montebourg will build on a Nov. 4 visit by French President Francois Hollande to Saudi Arabia's King Abdullah and a 2011 agreement between France and Saudi Arabia that offered the Saudis atomic know-how and training for local staff.
The kingdom has not yet launched a formal tender offer but is widely expected to do so, and nuclear equipment vendors worldwide are gearing up for when it does.
"We are still in a very early stage of the game in Saudi Arabia," an EDF spokeswoman told Reuters.
Eager to reduce domestic consumption of oil and diversify its energy mix, Saudi Arabia is considering building 17 gigawatts of nuclear capacity by 2032, the King Abdullah City for Atomic and Renewable Energy (KACARE) says on its website.
That is the equivalent of about 17 standard nuclear reactors, or about 10 of the 1600 megawatt European Pressurised Reactors (EPR) that Areva sells.
EDF CEO Henri Proglio and Areva CEO Luc Oursel will accompany Montebourg, putting up a united front despite years of acrimony between the two state-owned companies.
France plays a strong hand in Saudi Arabia, which has no nuclear capabilities of its own but has deep pockets and wants to acquire the most modern technology.
" Saudi Arabia will only deploy the most advanced and thoroughly tested technologies, paying maximum attention to safety, security and safeguards of the highest international standards," KACARE said on its website.
The third-generation EPR is one of the most modern reactors on the market. Conceived following the 1986 Chernobyl disaster, it has a double containment wall, a "core catcher" to contain core meltdown and multiple backup and cooling systems.
Unlike other suppliers, Areva also sells uranium, offering utilities long-term supply contracts.
EDF positions itself as the only utility company that can lead the complex civil engineering project involved in building a nuclear power plant and can also offer help with operating the plants.
This is not an advantage in emerging markets with strong nuclear capabilities such as China and India but matters a lot in countries without a nuclear tradition such as Saudi Arabia.
That said, the French will face formidable competition from U.S., Japanese and South Korean consortia. Westinghouse-Toshiba has deep ties with the Middle East, and a Korean-led consortium dealt the French a humiliating blow with its surprise win of a $40 billion contract in Abu Dhabi three years ago.
"In the end, the Saudis will make the call. They will define the parameters of a possible partnership," Bernard Bigot, head of French nuclear research organisation CEA, told daily Les Echos on Friday.
Hollande's government, despite having decided to cut the share of nuclear in French electricity generation to 50 percent in 2025 from the current 75 percent, is keen to export reactors.
One problem the French will not have in the Middle East, at least not in the next decade, is the soul-searching about how much technology to share with a customer before that customer becomes a competitor.
The French finance ministry is currently leading an investigation into whether a deal between EDF and its Chinese partner CGNPC put French strategic interests at risk.
News about that inquiry has ruffled feathers in China, and France last week dispatched its finance minister to assure the Chinese that they were not the object of the investigation.
As Montebourg returns from Saudi Arabia, French Trade Minister Nicole Bricq will leave for China, where she will tour the two EPRs being built there and talk to officials.
She may need more charm than Montebourg. Not only are the stakes higher, but it is easier to build new relationships than to repair existing ones.