Valdai Club

Falling oil prices are adversely affecting plans for the construction of nuclear power plants.

On January 18, the Valdai International Discussion Club hosted a news conference and presentation of a report titled “The Prospects and Risks of the Development of the Nuclear Power Industry in the Middle East: Russia’s Interests,” edited by Anton Khlopkov, Director of the Moscow-based Center for Energy and Security Studies.

How can falling oil prices influence the course of the Arab Spring? Will Rosatom adjust its plans in response to current economic challenges? Will the Akkuyu nuclear power project be halted due to soured relations with Turkey? Participants in the news conference answered these and other questions.

Falling oil prices are certainly adversely affecting plans for the construction of nuclear power plants, said Mikhail Lysenko, former head of the International Cooperation Department at the state nuclear corporation Rosatom (2008-2015). However, the countries that plan to build or have started building nuclear power stations should not suspend construction, Lysenko said.

“Many countries are considering developing their nuclear power industries because nuclear power generation offers a solution to growing energy prices and decreasing fossil energy sources. On the other hand, oil prices are subject to market forces. We’ve seen prices fall and then resume growth many times,” Lysenko said.

Nuclear power generation allows countries to invest in projects whose returns will last for up to a hundred years. “This makes the situation more predictable. For a country that opts for such large-scale projects and approaches them seriously, the building of a nuclear power plant will create a situation of predictability for the country, allowing it to better plan its future in the sphere of energy,” the expert said.

He named the countries that will continue to develop their nuclear industries in the near future. “These are the United Arab Emirates and Saudi Arabia, because they have the money, and Iran, which I’m sure will build new power units for the Bushehr station. The project with Turkey will not be abandoned, despite our current falling out, because it is economically beneficial to Russia, which will ultimately own the [Akkuyu] project and will derive profits from it,” Lysenko said.

He believes that current economic challenges will only slow down the implementation of these projects but will not force the host countries to abandon them altogether. Rosatom plans to continue its cooperation with Turkey, Iran, Tunisia, Egypt and Jordan. “Projects where both sides are seriously dedicated will be implemented. The question is how soon,” Lysenko said.

Yelena Suponina, an adviser to the director of the Russian Institute for Strategic Studies (RISS), doesn’t share Lysenko’s optimism. In her opinion, all large projects in the Middle East are hanging by a thin financial thread and that there is a long period of instability ahead.

“Funds are lacking and investment is inadequate, because the region is highly unstable. This concerns all regional countries without exception. The rich Gulf monarchies and Turkey and its projects are also in the risk zone, including the Russian Akkuyu project,” Suponina said.

There will be more conflict situations everywhere, she believes. “This will be compounded by the possible aggravation of similar problems around the world, because European countries will not overcome their economic challenges any time soon. The pace of economic growth has slowed in many Asian countries as well, including China. All countries will be short of funds, and falling oil prices are only compounding these problems,” Suponina said.

However, Alexander Maryasov, Russia’s Ambassador Extraordinary and Plenipotentiary to Iran (2001-2005), believes that the fall in oil prices, however temporary it may seem, can promote the development of alternative energy sources, which means that the nuclear industry has a future in the Middle East.

“At the same time, we should consider not only economic but also military and political factors,” Maryasov said. “Tensions are running high in the region, and hence I foresee many problems for the implementation of nuclear projects there, especially in light of the dramatic increase in terrorism.”

Maryasov believes that Russia (Rosatom) would benefit the most from cooperation with Iran. “Iran’s firm political stability has not been disrupted by any attempts to initiate color revolutions there. Besides, it has huge economic and human potential, which will grow stronger after sanctions are lifted,” the expert said.

Speaking about Russia’s nuclear cooperation with Turkey, Maryasov said that the Akkuyu project would be most likely suspended. “I don’t think it would be prudent to talk about joint projects before the normalization of bilateral relations,” he said.