Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.Register Here×
In late May, Abu Dhabi's plans for a nuclear reactor received a boost when the US administration, while officially informing the US Congress of the proposed nuclear pact between the US and the UAE, not only backed the Emirates' request to acquire American nuclear technology but also held the peaceful nuclear programme up as exemplary.
From that date of notification, policymakers in Congress have 90 days to make a decision on the agreement – if they decide to do nothing the deal will automatically kick in.
Should they decide to give the deal their seal of approval, it will offer US companies the necessary authorisation to compete and bid in the UAE's nuclear programme and the construction of its nuclear plant in Abu Dhabi.
Judging by statements made by officials close to the administration, there are strong indications that the UAE will get the green light. "We should not only support the UAE deal, but it could be used as a model," Jon Wolfsthal, a former US government monitor at North Korean and Russian nuclear facilities and an advisor to Joe Biden, the vice-president of the US, told Bloomberg. Opposition to the agreement is limited, according to President Barack Obama's administration and industry officials, and they expect the bill to become law by September 2009.
The "123 agreement", named after Section 123 of the US Atomic Energy Act, contains several terms and conditions designed to ensure that nuclear power in the UAE will not include domestic uranium enrichment. Indeed, the agreement states that the programme will obtain the fuel from external sources.
Given the current economic situation in the US, the nuclear programme also gives American corporations an important opportunity to take part in what is highly likely to be a lucrative venture. General Electric (GE) is among the US-based firms that have submitted bids for the UAE's nuclear programme, according to the Wall Street Journal.
On May 22 President Obama said that he feels the agreement "will promote, and will not constitute an unreasonable risk to, common defence and security" of the US.
Of course when news first arrived that Abu Dhabi, an emirate blessed with a bounty of hydrocarbons, wanted to go down the nuclear route some sceptics found it hard to believe. But in a white paper released in April 2008, the UAE Foreign Ministry laid out the reasons for choosing such a path.
As the white paper explains, annual peak demand for electricity in the UAE is likely to rise to more than 40,000 MW by 2020, a cumulative annual growth rate of about 9% from 2007. Current capacity committed to domestic electricity generation can only match about 50% of that amount, creating a worrying supply gap. The use of crude oil to meet that demand "would entail significant financial and environmental penalties for the UAE," according to the Foreign Ministry.
There is, however, yet another sensible reason for implementing a nuclear strategy. Lady Judge, the chairman of the UK Atomic Energy Authority, told OBG, "From an economic perspective, it makes sense for Abu Dhabi to use nuclear power for domestic consumption so that it can sell more of its oil profitably on the international market."