Siemens turns to Russia for nuclear projects

By Daniel Schäfer in Frankfurt, Catherine Belton in Moscow and Daniel Dombey in Washington
Published: February 3 2009 11:24

Siemens on Tuesday turned to Russia for a possible co-operation on nuclear energy, in a politically delicate move to tap the fast growing market for nuclear power plants.
Vladimir Putin, Russia’s prime minister, invited Siemens for talks with Rosatom, the country’s nuclear state agency.

“We are ready to move from realizing piecemeal projects to the creation of a full-scale partnership between Siemens and Rosatom,” Mr Putin was quoted by Interfax after a meeting with Peter Löscher, Siemens’ chief executive, in Moscow.
The move came after Siemens’ supervisory board decided last week to sell its 34 per cent stake, worth more than €2bn ($3bn), in its nuclear joint venture with France’s Areva, in a sign of growing frustration about a partnership that gave it insufficient say in the company’s strategic development.
Mr Putin said Rosatom and Siemens could work together in their home countries and also in other international markets.
Mr Löscher said Siemens wanted to intensify its “outstanding and successful partnerships” in Russia, adding that it aimed to “come to a concrete decision before the end of April”.
Talks are expected to commence soon, but it remained open if it would end up in a joint venture or another form of co-operation. Siemens’ interest in the Russian market is politically delicate but rumours about opposition from the German government seem to be unfounded. People close to the situation have said that Angela Merkel, the German chancellor, is supportive of a possible deal.
Siemens, which aims to become a full-range supplier for nuclear power plants, is already a supplier to Rosatom. It has several contracts with the Russian agency to supply systems to reactors in Bulgaria and Slovakia.
The market for nuclear power plants is projected to be growing fast. Estimates show that 400 nuclear power plants with a total volume €1,000bn could be built by 2020 worldwide.
In Russia alone, Mr Putin has backed plans to build 26 new nuclear power plants in the next 12 years.
Siemens idea to join forces with Atomenergoprom underlined how Russia’s importance for German companies remained unabated, even amid the drastic economic downturn in the country.
Around 4,600 German companies have branches in Russia, according to the Committee on Eastern European Economic Relations, a German business initiative.
Closer Russian-German nuclear co-operation is likely to bolster the view that US companies are losing out on lucrative business in the sector.
Last year, the Bush administration and Moscow made a civil nuclear agreement that could have paved the way to business deals worth billions of dollars. But in the wake of the Russian-Georgian war, the Bush administration withdrew the agreement from Congress in September and put it on hold.
A state department official told the FT the Obama administration was looking to forge a new relationship with Moscow, which is keen for the nuclear agreement to be pushed through. But he added that no decision had yet been reached on whether to re-submit the agreement to Congress for approval.
Copyright The Financial Times Limited 2009