Saudi Arabia is planning to build 16 nuclear reactors over the next two decades, despite being the world’s largest exporter of oil and holding the largest oil reserves. Riyadh, realizing that demand for electricity will grow in the coming years as a result of development and an increasing population, launched the nuclear project in November 2018.
When it comes to the question of nuclear energy cooperation, Saudi Arabia is keeping its options open, considering not only the United States but also other nations to meet its requirements. Cooperation with the United States or other countries would allow Riyadh to choose from the best technologies available to meet its growing demand for electricity. This article aims to analyze the nuclear energy environment in Saudi Arabia.
Nuclear power ambition
Saudi Arabia plans to invest $80 billion in 16 nuclear reactors over the next quarter-century. In December 2017, Toshiba-owned Westinghouse discussed with US companies forming a consortium to build two nuclear reactors in Saudi Arabia. In November 2017, the Saudi government’s nuclear agency – the King Abdullah City for Atomic and Renewable Energy (KACARE) – held talks with Westinghouse to discuss the regulatory and policy issues related to a possible cooperation on the nuclear energy program. In April 2018, a US trade delegation including 20 US companies visited Riyadh.
Nuclear energy is crucial to Saudi Arabia for three reasons. One is that economic growth and development requires more electricity and nuclear power can provide clean energy. KACARE reports that the “annual increase in domestic demand for energy ranges now between 6 percent and 8 percent, and that the kingdom will have to increase its generated power by 80GW by 2040.” KACARE has also played a crucial role in initiating the concept of a joint civil nuclear energy program among the Gulf Cooperation Council (GCC). Not only would nuclear power help Saudi Arabia meet its energy demand, but it would allow the country to avail itself of cheap electricity, avoiding a heavy reliance on fossil fuels that would only result in high economic costs.
Second, Riyadh is looking to diversify its energy mix so it can export its crude oil and reduce its dependence on the same, utilizing nuclear power to meet its own energy demands. Third, neighboring countries are already pursuing nuclear energy programs – one being rival Iran. Hence, pursuing a nuclear energy program would provide the Saudis a sense of pride and accomplishment. The aim is to build 16 nuclear reactors with 17.6 gigawatts of nuclear capacity by 2032. By 2040, it plans to derive 15 percent of its energy from nuclear power. It also plans to develop small reactors for desalination.
Saudi Arabia desires to become self-sufficient in producing nuclear fuel as it has an abundance of uranium reserves. In 2011, it appointed WorleyParsons to conduct site surveys and an analysis of the most suitable potential reactor sites, rank them in order of preference and develop technical specifications for the nuclear power plants.
The Saudi National Atomic Energy Project has four components:
- Large nuclear power plants with an electrical capacity of 1,200-1,600 megawatts to support the baseload in the electrical grid throughout the year
- Small module reactors for the production of electricity, desalination, power generation, heat generation in the petrochemical industry, oil refining and mining.
- Nuclear fuel cycle in which uranium would be utilized, as well as uranium for the international market.
- Regulator for establishing a legislative and regulatory framework for atomic energy and radiation sources.
Saudi Arabia has received the go-ahead from the International Atomic Energy Agency (IAEA) under the
Trump has repeatedly stressed the importance of maintaining financial and diplomatic ties with the Saudis, but has not addressed the potential civil nuclear cooperation agreement.
Integrated Nuclear Infrastructure Review (INIR) to proceed with its nuclear energy program. The INIR concluded in July 2018 that “Saudi Arabia is well placed to finalize its plans for construction of its first nuclear power plant.” Saudi Arabia, being a party to the Non-Proliferation Treaty (NPT), has entered into a comprehensive safeguards agreement with the IAEA, and has also negotiated a small quantities protocol (SQP) with the IAEA that would limit declaration and inspection requirements, on the basis that Saudi Arabia has a small nuclear program.
It has “established a legislative framework and carried out comprehensive studies to support the next steps of the program.” The Saudi cabinet is also striving to ensure the nuclear program is “in full compliance with the principle of transparency,” and meets nuclear safety standards “in accordance with an independent regulatory and supervisory framework.” In mid-2018 there were reports that Riyadh planned to dispose of nuclear waste by transforming its only land border into a military zone and nuclear waste site.
US-Saudi cooperation and complexities
The administration of US President Donald Trump wants Saudi Arabia to accept the gold standard accepted by the United Arab Emirates (UAE) and other Middle Eastern countries that have entered into nuclear energy cooperation with the United States. The gold standard 123 Agreement of the US Atomic Energy Act of 1954 includes provisions that any country entering into nuclear energy cooperation with the United States will not enrich uranium or reprocess spent fuel. However, Saudi Arabia refuses to accept this gold standard and has demanded that it be allowed to enrich uranium.
US-Saudi ties have also been weakened by the murder of journalist Jamal Khashoggi and Saudi actions in Yemen and Lebanon. But, according to the Arms Control Association, “[President] Trump has repeatedly stressed the importance of maintaining financial and diplomatic ties with the Saudis, but has not, at least recently, specifically addressed the potential civil nuclear cooperation agreement, which supporters say could be a boost to US companies in the civil nuclear energy field, such as bankrupt Westinghouse Electric Co.”
What has complicated matters further is that Westinghouse was recently acquired by a Canadian asset management company, and Saudi Arabia has an edict prohibiting business with Canada as a result of Canadian criticism of its human rights record.
Considering that Iran is allowed to enrich uranium for its energy program, the Saudis feel they would lose face in front of their Iranian counterparts should they accept an agreement that would not allow them to enrich uranium. It has been five years since Riyadh and the United States first discussed nuclear energy cooperation, but little progress has been made due to the gold standard issue. The United States is hell-bent on maintaining its non-proliferation standards, which is clear from a statement by US Energy Secretary Rick Perry that “being perceived as very, very strong on non-proliferation was a most important message, globally.”
However, Dan Lipman, vice president of the Washington-based Nuclear Energy Institute, has said nuclear cooperation with Riyadh is in the US interest. “Saudi Arabia is going to purchase small and large nuclear power plants from somewhere. For commercial, technical, safety and non-proliferation reasons, we want them to buy from America.” In a letter to the US Congress, American nuclear experts expressed their concerns regarding the adverse effects the stringent 123 Agreement might have on US-Saudi nuclear cooperation.
“US nuclear cooperation with Saudi Arabia will be advantageous to US foreign policy, national security and non-proliferation interests in the Middle East and beyond, but the 123 Agreement with the kingdom will not be possible if the United States seeks to impose conditions that Saudi Arabia will reject. The United States needs to adapt its policies to the needs and interests of individual countries.”
Not everyone agrees. In October 2018, in a letter to Congress, Senator Ed Markey, Democrat from Massachusetts, disclosed a letter that asked the Trump administration to not only go forward with the 123 Agreement but also to revoke existing Saudi “Part 810” authorizations that allow the transfer of nuclear services, technology and assistance. In December that year, Markey and Senator Marco Rubio, Republican from Florida, supported the idea of introducing a bipartisan bill that would ban the United States from entering into any nuclear cooperation with Saudi Arabia unless it came clean about the death of Jamal Khashoggi.
The No Nuclear Weapons for Saudi Arabia Act would ensure the US Congress had the final say on any nuclear cooperation between the United States and Saudi Arabia, and that no agreement would proceed unless Riyadh was “truthful and transparent” about the death of Khashoggi, a US-based journalist. According to Markey, the “legislation would ensure” the United States puts “key checks in place to ensure that Saudi Arabia never ends up with US technology or materials to make a nuclear bomb.” It would also force Riyadh to uphold myriad strict restrictions and regulations to ensure it did not leak classified information on nuclear technology.
US Secretary of State Mike Pompeo is of the belief that, given the administration’s ongoing efforts to prevent the Iranian regime’s uranium enrichment and reprocessing of spent fuel, “it is more critical and necessary for the kingdom of Saudi Arabia to accept and uphold the gold standard for responsible nuclear behavior.” Saudi Arabia is party to an SQP and any nuclear program on a large scale would make the SQP null and void, as the protocol is only meant for countries with small nuclear programs. This could develop into a complex issue, as the Saudis might refuse to allow IAEA inspections in the
future, claiming the SQP provides that leverage even if they pursue a nuclear program on a larger scale. Skeptics of the Saudi nuclear program have also raised concerns that Riyadh might block United Nations inspections of its nuclear facilities when it pursues a nuclear program.
It is evident there is some opposition from US lawmakers to compromising on the gold standard, and the United States faces stiff opposition from Israeli Prime Minister Benjamin Netanyahu, who has time and again warned against allowing the Saudis to enrich uranium. The concern that lingers is that Riyadh may also develop a nuclear bomb should it be exempted from the gold standard. This is a concern for Israel, despite warming relations with Saudi Arabia. Israel has already given the Trump administration a series of demands that include keeping Israel updated on any negotiations with Saudi Arabia on nuclear cooperation, and also to inform Israeli leaders in advance about the specifics of technologies that would be transferred to Saudi Arabia.
Concerns over the possible direction of Riyadh’s nuclear program became even more acute when Saudi Crown Prince Mohammed bin Salman warned, “Saudi Arabia does not want to acquire any nuclear bomb, but without a doubt, if Iran developed a nuclear bomb, we will follow suit as soon as possible.” Reprocessing fuel or enriching uranium can lead to the development of nuclear weapons, defying the obligations of the NPT. However, Saudi Arabia became party to the treaty as a non-nuclear weapon state in 1988 and, under its provisions, has the right to carry out a nuclear energy program and enrich uranium. There are also reports that Riyadh funded a nuclear weapons program in Pakistan in return for nuclear weapons should the need ever arise. The Middle East is a Nuclear-Weapon-Free Zone. Canadian officials have also raised concerns over Saudi Arabia’s threshold nuclear program: “Minimal safeguards are in place in Saudi Arabia to verify peaceful uses of nuclear energy … and it has refused to strengthened safeguards.” It must also be noted that Riyadh has not yet signed the Comprehensive Nuclear-Test-Ban Treaty, which bans nuclear explosions of any yield at any place.
What makes the United States doubt Saudi Arabia’s nuclear ambitions is that it possesses ballistic missiles acquired from China. In addition to short-range liquid-fueled ballistic missiles, it also bought the DF-21 long-range solid-propelled ballistic missile from China. Although reports claim the missiles are modified to serve only conventional roles, there is no doubt they can be given a nuclear role.
Is the US the only option?
The United States is not the only option for Saudi Arabia if it wants nuclear technology for a nuclear energy program. In January 2018, Riyadh carried out the evaluation process for a request for information (RFI) and organized nuclear cooperation meetings with suppliers that included not just the United States. Russia and China are also keen to pursue nuclear energy cooperation with Saudi Arabia, and have already carried out nuclear energy cooperation with several countries in the Middle East.
Riyadh has already agreed to carry out cooperation with China in nuclear fuel element supply and manufacturing, and research reactors. It has also struck an agreement with Beijing to carry out feasibility studies for the construction of a high-temperature gas-cooled reactor. Russia’s state-owned Rosatom has plans to outfit the Saudi nuclear power project with the world’s first operational Generation-3 reactor technology, VVER-1200. The reactor has one of the most advanced safety systems in the world and Rosatom is also ready to supply a lifetime of fuel for the reactors should a deal be struck.
As Russia endures US economic sanctions, it will find any nuclear deal with Saudi Arabia a respite and a means to earn currency. China is pursuing its Belt and Road Initiative, in which the Middle East plays a crucial role, and will find nuclear diplomacy with Saudi Arabia and other Middle Eastern countries to be conducive to the strategy. Saudi Arabia is interested in energy projects in Russia, and Moscow is keen to cooperate with more countries in oil and gas. Moscow and Beijing will also try to capture the defense market in Saudi Arabia and nuclear diplomacy is a step toward achieving this goal. Not only would this help Russia and China earn hard cash, as Saudi Arabia is the world’s fifth-biggest military spender, but it will also enable the two countries to reduce US influence on the Saudi defense market.
Saudi Arabia will pursue a nuclear energy program whether or not Iran does, to meet its growing demand for electricity.
Riyadh has already expressed interest in Russia’s S-400 air and missile defense system. Such cooperation would allow Russia and China to increase their influence in the Middle East. Russia’s nuclear diplomacy and increased cooperation with Riyadh would also help keep global oil prices low, as Russia is well aware Saudi Arabia is a member of the Organization of the Petroleum Exporting Countries (OPEC), and other members like Venezuela and Iran are less amenable to lowering prices.
The United States also faces stiff competition from South Korea, which has shown keen interest in nuclear energy cooperation with Riyadh. The two signed an agreement in 2011 that states: “Uranium transferred pursuant to this agreement or used in any equipment so transferred shall not be enriched to twenty (20) percent or more in the isotope U-235 unless the Parties otherwise agree,” leaving room for Seoul to pursue enrichment activities up to 20 percent. It has also ventured into the nuclear energy market in the United Arab Emirates, so Saudi Arabia may consider the option positively. Riyadh has also sent nuclear experts to South Korea to work closely on nuclear safety and security issues and acquire training on System-Integrated Modular Advanced Reactor technology.
Saudi Arabia’s energy minister, Khalid al-Falih said: “If the US is not with us, they will lose the opportunity to influence the [nuclear] program in a positive way.” He has also clearly stated that it would not make sense for Saudi Arabia to import enriched uranium when the kingdom itself is rich in natural uranium.
France is also an option and French utility company EDF is a strong contender. In 2017, EDF representatives visited Saudi Arabia for an RFI and to discuss the technicalities of European Pressurized Reactors.
In 2011, Saudi Arabia also signed a nuclear cooperation agreement with Argentina. That country’s Atomic Energy Commission and technology firm INVAP have a simplified pressurized water reactor design aimed at small-scale electricity generation and water desalination projects. Riyadh has also established nuclear cooperation with Indonesia, Kazakhstan, Finland and Hungary.
In 2015, it struck a nuclear cooperation agreement with Hungary that included design, construction and operation of commercial nuclear power plants and research reactors. The agreement also covers cooperation in nuclear safety, security, emergency preparedness and response, and radioactive waste management. However, the seeds of this cooperation were sown in 2012 when Saudi Arabia entered into a nuclear cooperation with Hungary to exchange scientific and technical information, patents, technologies, researchers, engineers and mechanical experts, training programs, joint research groups and technical assistance. There was also a plan to cooperate on nuclear technology in the fields of medicine, agriculture and other industries.
In 2016, Saudi Arabia signed a nuclear cooperation agreement with Egypt that included peaceful uses of nuclear power, nuclear security and an exchange of information on nuclear safety. The two countries have also agreed to cooperate on creating a transnational city and economic zone under the Neom city project. Also in 2016, Riyadh signed a nuclear cooperation agreement with Kazakhstan, which already collaborates with Russia on uranium enrichment. Saudi Arabia could in the future seek help from the two countries for the enrichment process. Kazakh Energy Minister Kanat Bozumbayev said: “We produce fuel pellets, we are at the stage of creating fuel assemblies. We have necessary experience, which we can share with our Saudi colleagues.”
In 2018, the Finnish Radiation and Nuclear Safety Authority signed an agreement with the Saudi government for the construction of two nuclear power facilities.
It would be wrong to say that nuclear power in Saudi Arabia would nudge other countries in the Middle East toward pursuing the same, as most countries in the region are already looking at nuclear power to meet the growing demand for electricity and to keep pace with Iran’s nuclear program. The Saudi program is an additional burden to deal with as a result of the Iranian program.
Most countries, including Turkey and Egypt, will continue their nuclear energy programs whether or not Saudi Arabia pursues one, and they will probably go ahead with the capability to enrich uranium whether or not Saudi Arabia accepts the gold standard. And while pursuing a nuclear weapons program may result in Saudi Arabia being subject to US sanctions, it could also be that if the kingdom pursued such a program, Russia, China and many more countries could continue economic relations with Riyadh, tempering the affects of any such sanctions.
It is difficult to determine if the Saudis would pursue a nuclear weapons program if Iran pursued or abandoned its own program. But they will certainly pursue a nuclear energy program whether or not Iran does, to meet the country’s growing demand for electricity. Not only will Saudi Arabia not want to be left behind by the Iranians, but it also wants to keep up with the GCC, especially the UAE.
Is there a solution?
The United States could allow Saudi Arabia to enrich uranium up to a certain percentage. Restricting it to an enrichment capacity below 20 percent could serve the US purpose of strengthening non-proliferation and keep the Saudis satisfied with having struck a deal to allow enrichment. However, such a deal could result in countries like the UAE that have agreed to the US gold standard to ask to be allowed to enrich uranium up to a certain percentage. The other option is to keep re-engaging with Saudi Arabia to strike a deal that would abide by the gold standard, if the United States wants to capture the Saudi nuclear market. But, as of now, nuclear energy seems to be a matter of prestige and pride for Riyadh, as its staunch rival Iran is pursuing the same. Therefore, it would not want to settle for anything less than a nuclear program similar to that of Iran. This is evident from remarks by al-Falih, the Saudi energy minister: “Whatever we do is going to be under strict compliance with international agreements. But we will not deprive ourselves of accessing our natural resources and localizing an industry that we intend to be with us for the long term.”
Another option for Saudi Arabia is to sign and ratify the additional protocol, a provision of the IAEA with a condition attached that it be allowed to enrich uranium. This could be a good solution as it would provide the IAEA greater opportunity for inspection and verification of the nuclear program. It also needs to be seen, now that President Trump has walked out of the Iranian nuclear deal, whether that move could persuade the Saudis to agree to the gold standard, given their welcome for Trump’s move.
Amid these concerns and developments, the United States remains in a dilemma as to its best policy toward Riyadh. Efforts at the moment would be to cajole Saudi Arabia to agree to a deal that would strengthen non-proliferation, while Riyadh wants a deal that suits its purpose, knowing full well that there is no dearth of competitors in the market. The United States would not want a Russian or Chinese nuclear market to flourish in Saudi Arabia. Riyadh, on the other hand, has many choices.