President Vladimir Putin sealed an agreement Thursday in New Delhi for Russia to build at least four more nuclear reactors in India, a project potentially worth up to 8 billion euros ($10.35 billion).
But Russia will only be able to pull it off if India is freed from international restrictions on nuclear cooperation. And if the restrictions are lifted, the United States and France are likely to compete with Russia for a share of the vast nuclear energy market in India's booming economy.
Putin met Thursday with Indian Prime Minister Manmohan Singh. The letter of intent was signed in their presence by Federal Atomic Energy Agency chief Sergei Kiriyenko and his Indian counterpart, Anil Kakodka. Under the agreement, Russia would build four reactors for the Kundankulam nuclear power station on the Indian Ocean where it is already building two similar 1,000-megawatt reactors, the Federal Atomic Energy Agency said in a statement. The agreement also would give Russia an option to build more reactors at other sites, the agency said.
At a news conference after the talks, Singh thanked Russia for its assistance in developing the nuclear energy sector and support in the efforts to lift the international restrictions.
"Energy security is the most important of the emerging dimensions of our strategic partnership," Singh said, Reuters reported. "We look forward to a long-term partnership with Russia in this vital field."
The Nuclear Suppliers Group -- a body of 45 countries that possess nuclear technology and regulate international trade in the field -- banned sales of nuclear fuel, reactors and other technology to India in 1992 in an effort to prevent the proliferation of nuclear weapons. Since then, India has successfully produced its own nuclear bombs.
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This contract could give Russia an edge over possible future competitors. The "nuclear power station Kundakulam ... is an example of fruitful cooperation between India and Russia and gives both sides a priceless experience of interaction," Kiriyenko said in New Delhi, his agency's press service reported.
In 2000 and 2001, Russia and France attempted to convince the Nuclear Suppliers Group that the restrictions were pointless, said Anton Khlopkov, deputy director of PIR Center, a nongovernmental organization that monitors nuclear policy.
The United States blocked the proposal at the time, but last month U.S. President George W. Bush signed a bill allowing civilian nuclear trade with India. The United States will now seek a decision by the Nuclear Suppliers Group to remove the Indian trade restrictions, said Alexander Pikayev, a nuclear issues expert at the Institute of World Economics and International Relations.
Kiriyenko said India deserved to have the restrictions lifted. "This country has an impeccable reputation in terms of nonproliferation," he said.
Pikayev said the restrictions could be lifted this spring, while Khlopkov predicted it was more likely to happen later in the year.
"Everything will depend on the U.S. readiness to cooperate with India," Khlopkov said. "I do not rule out that the U.S. will not hurry a decision until it has chosen sites for its own construction and discussed, at least verbally, the types of reactors."
All 45 countries have to agree for the restrictions to be lifted, Pikayev said. Opponents of nuclear trade with India include Japan and a number of European countries that do not have nuclear weapons, he said.
"It is vexing for non-nuclear countries that they had to refuse the possession of nuclear weapons in exchange for the opportunity to develop nuclear energy," he said. "They sacrificed an important prospect for their national security and India didn't."
China, Ireland, Australia and New Zealand are also among the opponents, Khlopkov said.
These countries are likely to reverse their stance under pressure from the United States, Pikayev said. They also may have a commercial interest in doing so, Khlopkov said, pointing to discussions in Australia of the possibility of shipping nuclear fuel to India.
The signing of the letter of intent Thursday does not necessarily give Russia an indisputable lead on the Indian market, Pikayev said.
"The Indian economy is growing rapidly. The country is choking from a lack of energy resources. Four reactors is a drop in the ocean," Pikayev said. "The Americans will get a portion of the contracts as gratitude for the lifting of the restrictions. The Americans will get a lot."
Yesipova, the Atomstroiexport spokeswoman, would not name a price for the new reactors in India but said they would cost approximately the same as similar reactors to be built in Bulgaria. The company won a tender last year to build two reactors in Bulgaria for 4 billion euros ($5.18 billion), she said.
Pikayev argued that the reactors could be less expensive to build in India because of lower labor costs.
In other energy deals, Rosneft signed a memorandum of understanding with India's Oil and Natural Gas Corporation to expand cooperation in Russia and India. The companies have 20 percent each in the Sakhalin-1 project.
Sergei Ivanov, defense minister and deputy prime minister, who was in India earlier in the week, said Russia would also welcome Indian investment into Sakhalin-3.
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