China Makes Nuclear Deal With American Company?

Westinghouse wins China nuclear deal

December 17, 2006

Beijing: US-based Westinghouse Electric has won a two-year battle for a multibillion-dollar nuclear power deal with China, edging out French and Russian rivals.

The deal, estimated in the past at some $8 billion, should warm relations between the world's top two energy consumers, who have clashed lately over a range of issues from the yuan currency to the Chinese bid for US independent oil firm Unocal.

It will also reaffirm China now a laggard in the nuclear sector at the forefront of a global trend towards increased use of atomic power, touted by many nations as the cleanest, cheapest solution to the world's strained energy industry.

"[The agreement] represents a major step forward in our relations and will advance our bilateral trade relationship and the energy security of both our nations," US Energy Secretary Samuel Bodman said in a statement after signing the memorandum with Ma Kai, the chairman of the National Development and Reform Commission (NDRC), China's powerful energy policymaking body.

He said it would help the US balance of payments and create more than 5,500 US jobs. The US had a record $202 billion trade deficit with China last year.

Other suitors included France's Areva, with French President Jacques Chirac lobbying Beijing on an October visit, and Russia's Atomstroiexport.

China said it chose Westinghouse partly because of technology transfer and issues of self-reliance and localisation of technology. Given Toshiba's presence, the deal may have also been eased by a thaw in ties with Japan after Shinzo Abe took over as Prime Minister earlier this year promising to patch up a relationship that had sunk to its worst in decades.

Analysts say China hopes to use the deal, which came after a two-day visit to Beijing by the US's top econ-omic policymakers and amid fears of a surge in protectionist sentiment, to soothe more than just energy ties.

"This is all relationship driven," said David Hurd, energy analyst at Deutsche Bank in Beijing.

"The US is putting pressure on China at the moment so China's response is 'let's throw them a bone'," he added.

Estimates

Stephen Tritch, Westinghouse Electric Co. President and CEO, said the four plant deal was a multi-billion dollar one, but gave no specifics. Past estimates put the deal at $8 billion.

The two sides aim to move from the memorandum of understanding signed yesterday to a framework agreement and then draw up a contract.

The 1.1 gigawatt plants will use Westinghouse's advanced AP1000 design, which was only fully certified by the US Nuclear Regulatory Commission last year.

In an undated brief on its website, Westinghouse estimates capital costs for the reactor at less than $1,200 per kilowatt, which would take the total expenditure to about $5.3 billion.

Further Information:

Press Release from Westinghouse