Declining oil prices have nevertheless played havoc with Russia's economy, which last year before the recession began had experienced a straight decade of growth averaging 7 percent annually since the 1998 fiscal crisis. Of Russia's 9.7 mbpd production, approximately 2.7 mbpd was consumed domestically, freeing about 7 mbpd for export. Even at depressed world prices, Russia relies on income from its oil and gas exports for a substantial portion of its budget revenues; accordingly, to free up hydrocarbons for export, Russia is looking to supply its future energy needs by increasing its nuclear-power program.

The Russian Federation currently operates 10 nuclear power plants housing 31 reactor units, which supply approximately 16 percent of Russia's energy needs. Except for the Bilibino Nuclear Power Plant in eastern Siberia, the other nine complexes are all located in European Russia. Prime Minister Vladimir Putin is proposing a massive expansion of Russia's nuclear-power complex, which, if implemented, would effectively double the amount of Russian electricity generated by nuclear power.

During an April 15 meeting on the development of the country's nuclear-energy program with Sergei Kiriyenko, head of Russia's State Atomic Energy Corp., Rosatom, at the Kalinin Nuclear Power Plant near Udomlya, about 120 miles northwest of Moscow, Putin said starkly, "We need to build 26 units." He added, "We have formed extremely ambitious, but fully realistic, plans. By 2030, the share of nuclear generation in (Russia's) overall energy production should total 25-30 percent. Today it's 16 percent. Taking into account the current situation, the realization of these plans requires special attention. It's clear that we need to look at how we are going to resolve this issue given the global economic and financial crisis. No matter what happens, we should fulfill the goal that I spoke of."

Ironically, Putin's call for increased nuclear generation of electricity comes amid declining consumer demand, as Russians, in common with other depressed nations, have cut back on power consumption; according to the Russian Energy Ministry, demand for electricity could decline by about 4 percent by the end of the year. Putin, however, dismisses the dip as temporary, commenting, "Experts say that we'll reach the pre-crisis growth rates in power consumption of about 3 percent per year by 2012. I think that demand for energy resources will start to gradually increase once again in 2010, and by 2012 we will return to the pre-crisis growth rates in energy consumption."

Putin is willing to back up his government's ambitions with financial resources, telling Kiriyenko that his administration would support the state nuclear corporation's request for nearly 50 billion rubles ($1.47 billion) in additional capitalization. Rosatom's investment program is currently 164 billion rubles ($4.83 billion); 73.3 billion rubles ($2.16 billion) is allocated from the federal budget, with 26 billion rubles ($766 million) in the form of loans.

Despite Putin's largesse, however, Rosatom is facing financial difficulties, and Kiriyenko appealed to the prime minister for his organization to be able to issue bonds, saying, "The ability for infrastructure bonds is needed. We have prepared the corresponding proposal, but governmental (permission) is needed."

In true capitalist fashion and in a not-so-subtle swipe at Russia's banks, Kiriyenko complained, "An obvious question is the loan interest rate. This is very important for the sector. The results of current talks with the banks indicate that even the most discounted rate will be about 16 percent annually. Building the nuclear plants at 16 percent interest is not possible. Ten percent is the maximum."

Lastly, in a final flourish of salesmanship, the Rosatom boss urged that Putin push for swift approval of the federal program on new nuclear technologies aimed at development of a fourth generation of reactors, saying, "The program is ready, it has been agreed with everyone. In the near future the Economic Development Ministry will report on it to the government."

One issue that apparently was not raised during the Kalinin discussions but permeates both Rosatom and the government's perceptions about the nation's nuclear program is that it is a source of foreign revenue, as nations considering nuclear-power generation look to Moscow for possible assistance. Worldwide, 30 countries operate 439 nuclear reactors for electricity generation, which collectively provide about 16 percent of the world's electricity production, while 11 nations are building 30 new nuclear-power facilities. Russia is eager to enter this market; while its involvement with Iran's Bushehr reactor is Russia's best-known nuclear diplomacy, Russia is also involved worldwide in the rush for nuclear business, from a tender to build reactors for Turkey's first nuclear power plant complex at Akkuyu on the Mediterranean to Nigeria. The ultimate potential prize, however, remains Russia's superpower neighbor China.

Of China's 11 nuclear power plants, the oldest, Qingshan-1, only came online in 1991. While Western attention is focused on growing Chinese involvement in the global energy market, Beijing has already announced plans to spend $50 billion to build an additional 32 nuclear plants by 2020; Rosatom's involvement could generate far more revenue than issuing bonds in the deepest bear market in decades.

Putin's ambitions notwithstanding, it is more than a little ironic that the world's second- and third-largest oil exporters, Russia and Iran, are pursuing nuclear-energy programs at a time when plummeting oil prices amid the global recession have tempered the global flush of enthusiasm of a year ago for nuclear power when oil prices hit record highs. Nuclear power has high capital costs and low variable costs, while with oil- and gas-fired plants, the opposite is true. In 2003 Massachusetts Institute of Technology Professor Ernest Moniz co-authored "The Future of Nuclear Power" and concluded that electricity generated by a nuclear plant was about 60 percent more expensive than power from traditional gas- and coal-driven plants and maintained several years later that there was no reason why the report's pricing conclusions would need to be changed substantially for today's market.

Should Moniz's conclusions prove correct, then Kiriyenko is going to have to issue a lot more bonds in a crowded market, as last week Russian Deputy Prime Minister and Finance Minister Alexei Kudrin said that Russia may raise foreign loans in 2010. Even worse, on April 14 Kudrin told a meeting of the Finance Ministry's collegiums, "We will have to revise the budget in 2010 to account for a projected drop in revenue of more than 30 percent compared with planned revenue this year," cutting Russian federal budget spending from 10.3 trillion rubles ($303.5 billion) to 9 trillion rubles ($265.1 billion).

Things can only remain unsettled so long as the Russian government depends on energy revenues for the bulk of its income in the midst of a global recession. While estimates vary widely, both the International Monetary Fund and World Bank believe that hydrocarbon exports generate more than 60 percent of the Russian government's export revenues.

In such an austere environment, nuclear energy may increasingly come to look like an expensive white elephant rather than a fourth-generation nuclear-reactor technological triumph.

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