Bushehr +

13.11.2014

In Moscow, on November 11, 2014 officials signed the Protocol to the Intergovernmental Agreement between Russia and Iran on Cooperation in the Construction of a Nuclear Power Plant in the Territory of Iran on August 25, 1992. According to the document the parties agreed on the construction of two more nuclear reactors in Iran at the site of the Bushehr NPP with a possible increase in number of up to 8 units (4 on-site at Bushehr and another 4 on a new site, the to be determined the parties.

A few points I would like to focus attention on:

1) Compared with the first unit at Bushehr, conditions are expected to be close to perfect. Rosatom will not have to complete the facility begun by a German company in the 1970s and later subjected to Iraqi bombing. There will not be strong pressure from Western states as the security of the Russian reactors for the nonproliferation regime has managed to become a universally accepted fact. All of this allows to immediately assess the cost and construction time (Bushehr was completed in over 15 years, and the majority of experts agree that the project did not profit Rosatom).

2)  Unlike many other foreign Rosatom projects, Iran will pay the total cost of the construction. This construction cost has not been disclosed, but in comparable contracts the price for two reactors has been close to 10 billion dollars.

3)  The Agreement effectively drives the nail into the coffin of the “oil in exchange for goods” scheme, which caused in its time large excitement (in more detail here and here in Russian). The construction of the NPP was announced as one of the key components of the deal from the Russian side. Thus, the Russian-Iranian Agreement will not lead to a violation of the sanctions regime and to the breakdown of negotiations on the Nuclear Program in the P5+1 format (which many feared), but, conversely, facilitates the resolution of a number of remaining contradictions.

4)  Unlike with Bushehr 1 (wherein the 10-year contract on the procurement of Russian fuel ends in 2021), Russia will deliver all of the fuel for the eight future units.  Rosatom is also undertaking the obligation to take back the spent nuclear fuel. Thus, it will not be necessary for Iran to increase its enrichment capacity in order to provide itself with material for fuel for the NPP (one of the reasons why Iranians insisted on the further expansion of their nuclear program).

5)  According to the Memorandum of Understanding between the State Atomic Energy Corporation “Rosatom” and the Atomic Energy Organization of Iran on the Expansion of Cooperation in the Use of Nuclear Energy for Peaceful purposes, parties will consider the possibility of producing nuclear fuel directly in Iran. However, even in this case, the fuel will be produced from uranium enriched in Russia.

6)  The widely discussed project of the removal of enriched uranium from Iran to Russia for fuel production (which will reduce the Teheran reserves, and thus, increase the time needed for the hypothetical construction of a nuclear weapon), can be solved within the framework of the Memorandum of Understanding as well as in the framework of deliveries of fuel for Bushehr 1.

7)  Despite the information in the New York Times, neither in the Protocol nor in the Memorandum is there a provision under which the subsequent four reactors “will be built in Iran with Russian assistance” (the author uses the term “Iranian-built reactors”). The text of the protocol sounds smoother: “the Parties shall ensure the maximum possible participation of enterprises and entities of the Islamic Republic of Iran in all works related to the construction of the additional nuclear power units at nuclear power plants sites, as well as in the commissioning, operation, modernization, operation life-time extension and decommissioning of nuclear power plants units”.

8)  Iran’s nuclear generation needs are not so large, and country is already producing more electricity than it is using (which, however, is negated by problems with electricity transmission infrastructure and weak readiness for peak loads). Given Rosatom’s order portfolio in Iran, we can assume that the Russian company in the foreseeable future will remain a monopoly in the Iranian market, since a greater number of the NPPs are hardly necessary for Teheran.

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