South Korean consortium recently signed a contract to provide four commercial
nuclear reactors to the United Arab Emirates (UAE), signaling a new role
for South Korea in the world nuclear energy market. The $20 billion deal
indicates that South Korea has completed the transition from passive
purchaser of turn-key nuclear plants in the 1970s to major nuclear technology
supplier, capable of competing with the largest and most experienced nuclear technology
companies in the world. The South Korean government reportedly has established
a goal for South Korea to capture 20% of the world nuclear power plant
market during the next 20 years, and the importance placed by Seoul on the
UAE contract was underscored by South Korean President Lee Myung-bak’s
presence at the signing ceremony in the UAE.
In the 1970s, South Korea launched its nuclear power program through the
government-owned Korea Electric Company (now Korea Electric Power
Corporation, KEPCO), which purchased the country’s first nuclear power
units from Westinghouse. In the early years of the Korean nuclear program,
Westinghouse and other foreign suppliers delivered completed plants with
minimal Korean industry input. After the first three units, Korean firms
took over the construction work on subsequent plants, although the reactor
systems, turbine-generators, and architect/engineering services continued
to be provided primarily by non-Korean companies. In 1987, KEPCO embarked
on an effort to establish a standard Korean design, selecting the System 80
design from the U.S. firm Combustion Engineering as the basis. Combustion
Engineering won the competition for the Korean standard design contract by
agreeing to full technology transfer, according to KEPCO. The technology
transfer program resulted in the development of the APR- 1400 power plant,
which is the design purchased by the UAE.
In the UAE deal, the South Korean consortium is headed by KEPCO and includes
other major Korean industrial companies that are involved in Korea’s
rapidly growing domestic nuclear power plant construction program. The
consortium also includes Pittsburgh-based Westinghouse Electric Company,
which currently owns the U.S. design on which the Korean design is based, and
the Japanese industrial conglomerate Toshiba, which now owns most of
Westinghouse. Because the AP-1400 is based on a U.S. design, U.S. export
controls will continue to apply.
U.S.-Korean nuclear energy cooperation is conducted under a “123 agreement”
required by Section 123 of the Atomic Energy Act of 1954. The current
agreement was signed in 1973 and will expire on March 19, 2014. A new 123
agreement does not require congressional approval, but it must lie before
Congress for 90 days of continuous session before going into effect.
As with most U.S. 123 agreements, the existing U.S.-Korean agreement requires
U.S. consent for any reprocessing or enrichment activities related to
U.S.-supplied materials and technology. Korea is requesting that the new
123 agreement include U.S. advance consent for future Korean civilian
reprocessing and enrichment activities. The United States has opposed the idea,
on grounds of general nonproliferation policy and the complications that
such activities might pose for other security issues on the Korean
peninsula. To comply with the 90-day congressional review requirement, a
new agreement probably needs to be submitted to Congress by spring 2013.
Any lapse in the agreement could affect exports of U.S. nuclear materials and
reactor components to Korea, potentially affecting ongoing construction of
the UAE project.
Date of Report: January 28, 2013
Number of Pages: 21 Order Number: R41032 Price: $29.95
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