An official contract was signed by a consortium led by South Korea's state-run Korea Electric Power Corp. and Emirates Nuclear Energy Corp. shortly after a summit between Lee and UAE President Khalifa bin Zayed Al Nahyan in Abu Dhabi.
South Korean President Lee Myung-bak said the deal will lead to a significant boost in ties between the countries as it also marked the largest energy deal ever contracted either by his country or the UAE.Korea is now a major player in exporting Light Water nuclear plants technology.
South Korean President Lee Myung-bak arrived in the United Arab Emirates (UAE) on Saturday in a push to win one of the world's biggest nuclear power contracts.
Both countries want to strengthen economic ties in "peaceful nuclear energy" among other areas such as renewable energies or reducing carbon emissions, the official UAE news agency WAM said after Lee's arrival.
The UAE is expected to award the contract estimated to be worth $40 billion to build several nuclear reactors "possibly early next week," industry sources said.
A South Korean consortium of Korea Electric Power Corp. (KEPCO), Hyundai Engineering and Construction, Samsung C&T Corp, and Doosan Heavy Industries is in the running to win the largest-ever energy deal of the Middle East.
Other bidders include a consortium of General Electric Co and Westinghouse Electric, a subsidiary of Toshiba Corp, and a French consortium led by EDF and GDF Suez and including Areva and oil group Total.
Lee is scheduled to hold a summit meeting with UAE President Sheikh Khalifa bin Zayed al-Nahayan during his two-day visit, the South Korean presidential Blue House said in a statement.
"It remains unclear whether South Korea will win the final contract to build nuclear power plants and President Lee's visit to the UAE is part of summit diplomacy to win the final ticket in the bidding," Lee's office said.
The French consortium was initially seen as a front-runner for the deal but it recently appeared to be losing ground to the Korean.
On the Korea Exchange earlier this week, shares of Korea Power Engineering and Doosan Heavy Industries rallied on expectations for the deal, analysts said.
IBK Securities analyst Yoon Jin-il said the contract is expected to be split in three stages with the initial order to be worth about $5 billion, but the first-phase winner is likely to take home the remaining two.
Work is expected to begin in 2012, UAE state news agency WAM has said. The UAE is the world's third-largest oil exporter, but it is planning to build a number of nuclear reactors to meet an expected need for an additional 40,000 megawatts of power.
South Korea's commerce and energy ministry said on Monday that it would focus on the nuclear power sector in 2010 and step up work on a plan to develop nuclear reactors with indigenous technology, as it outlined next year's policy objectives.
A consortium led by KEPCO on Sunday won a US$40 billion deal to build and operate four nuclear power plants in the United Arab Emirates. It is the largest ever order won by the country, some six times the cost of a $6.3 billion canal project in Libya in the 1980s.
This is also the first time Korea is exporting its APR1400 light-water reactor since the country started operating its first nuclear power plant, Gori No. 1, with U.S. technology in 1978. With the contract, Korea has turned from an importer into an exporter of nuclear power technology.
President Lee Myung-bak helped clinch the deal in a meeting with his UAE counterpart Khalifa bin Zayed Al Nahyan at the Emirates Palace Hotel Abu Dhabi. The two also agreed to develop the two countries' relationship into a strategic alliance.
The consortium also involves Doosan Heavy and Engineering Co., Hyundai Engineering and Construction, Samsung C&T Corp., Westinghouse Electric of the U.S., and Japan's Toshiba.
It landed the deal over a French consortium led by AREVA and a partnership of the U.S.' General Electric and Japan's Hitachi.
Under the deal, the KEPCO-led consortium will design and build four 1,400MW nuclear power units, one due for completion in 2017 and the other three by 2020. For the next 10 years, it will earn $20 billion for construction alone, the equivalent in money terms to exports of 1 million medium-sized cars or 180 300,000-ton oil tankers. By joining in the operation of the power plants during their 60-year life span, the consortium will make another $20 billion.
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