South Korea signs $2.25 billion deal with Russian nuclear company

Seoul, South Korea — South Korea has won a $3 trillion ($2.25 billion) contract with a Russian state nuclear power company to supply components and build turbine buildings for Egypt’s first nuclear power plant, officials said Thursday.

The South Koreans hailed the deal as a triumph for their nuclear power industry, though it made for uneasy optics as their US allies launched an economic pressure campaign to isolate Russia over its war on Ukraine.

South Korean officials said the United States had been consulted in advance about the deal and the technologies provided by Seoul for the project would not violate international sanctions against Russia.

According to South Korea’s Presidential Office and Ministry of Commerce, the state-run Korea Hydro and Nuclear Power was contracted by Russia’s Atomstroyexport to supply certain materials and equipment and construct turbine buildings and other structures at the plant to be located in Dabaa. built. The Mediterranean coastal city is located about 130 kilometers (80 miles) northwest of Cairo.

Atomstroyexport, also known as ASE, is a subsidiary of Rosatom, a Russian state-owned nuclear conglomerate. The company has a contract with Egypt to supply four 1,200 megawatt reactors until 2030. Korea Hydro and Nuclear Power’s part of the project will run from 2023 to 2029.

A senior aide to South Korean President Yoon Suk Yeol said negotiations were delayed by “unexpected variables,” mainly Russia’s war on Ukraine and the US-led sanctions campaign against Moscow for its aggression.

Choi Sang-mok, Yoon’s senior secretary of economic affairs, said South Korea has provided advance explanations to the United States about its plans to participate in the Dabaa project and that the allies will continue to consult closely as work progresses. . As part of US-led sanctions against Moscow, South Korea has terminated transactions with Russia’s central bank and sovereign wealth funds and banned the export of strategic equipment to Russia.

Neither Choi nor officials from the South Korean Ministry of Commerce discussed the impact of the crisis in Ukraine and the sanctions against Moscow on the negotiations between Korea Hydro and Nuclear Power and ASE.

Choi stressed that South Korea’s involvement in the project would not violate international sanctions against Russia.

“Every problem can be solved by different uncertainties, but they have all been resolved now and so we have been able to finalize the agreement,” he said.

Yoon’s office expressed the hope that South Korea’s participation in the Dabaa project would help the country gain a foothold in future nuclear projects across Africa as well as increase its chances of exporting to countries such as the Czech Republic, Poland and Saudi Arabia. enlarge.

Korea Hydro and Nuclear Power had been negotiating with ASE as the preferred bidder for the turbine-related project since December, before the Russian invasion of Ukraine in late February.

Go Myong-hyun, a senior analyst at the Asan Institute for Policy Studies in Seoul, said the deal would not have been possible without an export approval from the United States, as the components supplied by Korea Hydro and Nuclear Power are likely to be technology from the United States. US origin.

Current sanctions against Moscow also do not include specific restrictions on nuclear energy and the Biden administration would have no interest in disrupting a crucial project for Egypt, which it sees as an important partner in the region, Go said.

While South Korea’s involvement in the Dabaa project wouldn’t be an immediate problem among the allies if the Americans agreed, things could change depending on how Russia’s war on Ukraine goes and whether Washington expands its export controls against Moscow. said Go.

Yoon’s office said the Dabaa project is South Korea’s largest nuclear energy technology export since 2009, when a South Korea-led consortium won a $20 billion contract to build nuclear reactors in the United Arab Emirates.

Yoon, a conservative who took office in May, has pledged to boost South Korean exports of nuclear energy technology. energy.

Yoon said in a statement on Facebook that the deal reaffirms South Korea’s “advanced technology and security and strong supply chains” in the nuclear power industry. His government has set a target to export ten nuclear reactors by 2030.