As you are probably aware this week the WSJ and NYT published reports that Saudi Arabia, in a reported surprise move, has approached the US for so-called “security guarantees” and for assistance with its civilian nuclear energy program.

The Saudi government also asked for help in normalizing relations with Israel. This morning (03/10/23) the Washington Post reports that Saudi Arabia is planning to restore diplomatic relations with Iran based on negotiations reported to have been brokered by China.

These actions can be seen as part of a larger effort across multiple vectors to blunt Iran’s nuclear drive as evidenced by IAEA reports that Iran has enriched U235 to 84% which is HEU in weapons’ grade range.

For this reason, normalization of relations with Israel, and a request to the US for help with the Saudi nuclear energy program, can be seen as being part of the same playbook.

Starting with a premise that the IAEA report about Iran’s highly enriched uranium is the driver of these actions, nevertheless there are other factors at work.

Despite two high profile trips last year to visit potential vendors for its two reactors, Saudi Arabia has not made a decision on a selection. MBS came back from China and South Korea without making any indication to proceed with a contract for either party.

Saudi Arabia released a tender for two 1000-1400MW PWR type nuclear reactors last June. This offer was downsized from a plan first announced in 2014 to build 16 full size reactors. Volatility in the price of oil, some of which was created by the Saudi government, served to make the larger vision unattainable in the current era.

Behind it may be a domestic reason which is that the Saudi government does not yet have ability to successfully manage a civilian nuclear reactor construction program. It raises a question of whether the request to the US can even be taken seriously other than being part of a larger package of actions aimed at influencing Iran’s next moves.

It is reasonable to ask the question if the Saudi nuclear reactor program is a case of being “all hat and no cattle,” for the time being, absent the management capabilities that would be needed to handle all aspects, including regulation and safety, of contracting for two 1400 MW PWRs much less 16 of them which was the original plan released in 2014.

While any of the four apparent bidders on the tender could do the job – China, France, Russia, and South Korea – it is unclear whether at this stage Saudi Arabia has made the necessary investment in its own capabilities to identify, manage, and contain the risks inherent in a $14 billion, or more, construction program for nuclear power plants that would be expected to have service lives of 60-80 years.

The request to the US from Saudi Arabia for technical help with its reactor effort is a political nonstarter due to the lack of a 123 Agreement. This is due to a risk of Saudi plans to pursue dual use of nuclear technologies. Saudi officials have repeatedly insisted on their right to exploit their domestic uranium resources and to enrich uranium as a deterrent to Iran’s nuclear program. By comparison, the United Arab Emirates (UAE) did sign a 123 Agreement with the US to advanced its program to build four 1400 MW PWRs with South Korea’s expertise and US technology embedded in the design.

You can expect to see more news on these topics in the coming days so it probably helps to tag recent events as a “developing story.”

Separately, the intellectual property dispute between Westinghouse and South Korea over reactor technology will likely be resolved in an out of court settlement prior to an April 26th visit to  the US by South Korean President Yoon Suk Yeol.  The agreement will likely either result in a buyout of the Westinghouse IP or some hybrid arrangement. Either way it would remove a barrier to South Korea bidding on the Saudi nuclear deal.

South Korea has successfully delivered four very large commercial nuclear reactors to the UAE which strongly positions South Korea firms to repeat their success in other countries. From the US perspective, a South Korean win in Saudi Arabia, would block Russian and Chinese influence in a key oil producing state. Whether the Saudi government is ready to make any contract award seems unlikely given its request this week for US help.

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