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Fukushima Jackpot: Russia's Ambitions to Export Nuclear Technologies Will Not Buckle in Light of Japan's Nuclear Crisis, Say Analysts

Aerial View of Japanese Nuclear Plant With Smoke RisingThe crisis at Japan's nuclear reactor Fukushima Number One is sending powerful aftershocks through the global atomic energy industry, and also to a lesser extent through the energy industry as a whole. What the exact ramifications will be for the atomic energy industry, which had been enjoying a renaissance almost 25 years after the Chernobyl tragedy, is as unclear as the localized impact at ground zero in Japan. But despite its status as a growing exporter of nuclear power plants, Russia looks set to weather the storm and even emerge a winner from Japan's disaster.

The stricken Fukushima plant has drawn a large question mark over the viability of nuclear energy as an alternative fuel, and it has made some of its biggest proponents nervy. Last week China, which is seeking to increase atomic energy sevenfold by 2020 (putting China at the head of the world's largest nuclear program), halted approval of all its new reactors and ordered safety inspections on all 13 reactors on its coastline.

A fissure was also created in the 27 EU member states amid calls from some European countries for safety inspections of the EU's 143 reactors. France leapt to the defense of the numerous plants that provide around 80 percent of its electricity, while Germany ordered a three-month halt to its seven oldest power plants dating back to 1980 for a safety inspection.

Germany's move may play into Russia's hands in the "longer run" as concomitant energy shortfalls in Germany will have to be replaced, and Russian natural gas may serve as a "good option," said Alexander Bespalov, an oil and gas analyst for Alfa Bank. "In the short run the rise in global energy prices triggered by Fukushima may benefit Russia's gas major Gazprom by easing pressure from its European customers demanding more price concessions from the company," Bespalov said. "In terms of volumes, we see that the Russian government has ordered Gazprom to increase liquefied natural gas (LNG) supplies to Japan, although this is not a huge amount compared to the overall scale of business. Alternative sources of energy are needed to replace the Fukushima plant.

Russia is well positioned to provide LNG, as its Sakhalin 2 plant is quite close geographically to Japan," Bespalov added, noting that coal, fuel oil, but "predominantly" gas would be used in substituting energy shortfalls in Japan.

Nuclear ambitions

But amid the edgy global reaction to the Japan crisis, Russia's ambitious nuclear programs ­ ultimately steered by no less than the powerful Prime Minister Vladimir Putin and Deputy Prime Minister Igor Sechin ­ may have appeared a likely victim. But Russia will not actually have to abandon any of its various plans to expand its nuclear sector, according to Alexander Kornilov, the senior utilities analyst with Alfa Bank.

Rosatom currently aims to raise its share of domestic atomic energy from the current 16 percent to 25 percent on the heels of Rosatom Head Sergei Kirienko's call for the construction of some 40 nuclear power plants in Russia by 2030. President Dmitry Medvedev has drawn attention to nuclear energy in his modernization bid. And little of Moscow's behavior in the last weeks has suggested that it is even considering modifying its ambitions.

As discussion focused on the impact of what was then being touted as a possible Chernobyl "take two" in Japan, premier Putin on March 15 paid a trip to Belarus, signing off on a deal that may see Russia build two nuclear power plants. Presumably with the aim of instilling confidence in nuclear energy, Putin said: "The level of protection will be substantially higher than in Japan, and that's not taking into account that Belarus is not in a seismic fault zone like Japan." The comments may have appeared bewilderingly flippant as 180 Japanese workers braved lethal exposure to radiation to put out fires at Japan's Fukushima plant, but the comments also evidenced the political will to bolster Russia's export of nuclear energy technology.

The increasingly influential First Deputy Prime Minister Igor Shuvalov said on March 19: "We have our own plans for the development of nuclear power and we are also implementing these plans with our foreign partners. We believe there is no alternative at the moment."

Little projected fallout

Russia is building two nuclear power units in Tianwan in east China, which would logically be stymied as China's drive for nuclear power appeared to falter last week. Plans afoot for Russia to construct a number of nuclear power plants in India also appeared to be in jeopardy in light of Fukushima. But analysts played down any roundabout turn in plans, saying that the suggestions are emanating from the West. "According to my information, the rumors about the worries surrounding nuclear power generation are coming from European powers, and not really from China and India. There is a little risk that China will abolish plans for construction of those power plants, but I consider those risks to be quite negligible for Russia," said Kornilov. "Neither China nor India plan to reduce their nuclear power programs in light of the Fukushima issue in Japan."

On March 16, Russian President Dmitry Medvedev and Turkish Prime Minister Recep Tayyip Erdogan pledged to press ahead with last year's $20 billion agreement to construct a power plant near the city of Akkuyu on Turkey's southern coastline, less than 20 kilometers from a fault line. Bloomberg reported a week ago that Turkey is demanding that the plant be made resistant to magnitude eight earthquakes. But again, analysts are hesitant to write off Turkey's plans as unrest in the Middle East and North Africa cause gas and oil prices to rise.

Anton Khlopkov, an expert on atomic energy and director of the Center for Energy and Security Studies in Moscow, wrote this week that high hydrocarbon prices could raise political will in Turkey to obtain greater nuclear energy capacity. Khlopkov said that at most, he expects the Japan disaster to "force some countries to postpone the implementation of their projects."

Kornilov agreed, if only because of Russia's ambition. "Russia is not going to abolish its pretty extensive nuclear program, which includes a quite significant extension of the role of nuclear power generation in Russia, including the government plans for abroad," he said.

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