Saudi Arabia remains one of the largest oil producers (it produced 9.8 million barrels of oil a day in April this year) and the largest oil exporter in the world, despite the fact that Venezuela has larger proven oil reserves of around 300 billion barrels. Saudi Arabia’s oil exports account for around 42 per cent of its overall GDP, 90 per cent of its export earnings and over 85 per cent of its budget revenues, which, in 2017, totalled approximately 691.5 billion Saudi riyals ($266 billion).
Riyadh recognises, however, that oil is a finite resource, but also that the world is moving away from the use of hydrocarbons, towards cleaner and renewable forms of energy, such as solar and wind power. Unable to depend on oil revenues in the longer term, it has begun planning to ensure that its economy and energy security can be sustained in a post-oil world. It has decided, therefore, to acquire nuclear technology and construct nuclear plants that would enable it to achieve those goals, including water desalination for agricultural and other civilian purposes.
Saudi Arabia’s nuclear plans are not new, as a previous FDI paper shows. As that paper noted, Riyadh had plans to construct sixteen nuclear reactors and reportedly signed agreements with Argentina, Russia, South Korea and Hungary, among others, to acquire nuclear technology and the associated waste management expertise. More recently, it announced a tempered and revised plan to issue a multi-billion dollar tender in 2020, for the construction of two nuclear power reactors. It has entered into discussions with the US and other potential suppliers to that end. In addition to the goals stated above, Riyadh also wishes to free up more oil for export to ensure that its oil revenues do not fall, at a time when prices remain depressed. The kingdom currently uses oil to generate electric power. That process, however, reduces the oil produced – approximately 10 million barrels a day, as noted above – by around 25 per cent. It therefore can export only 7.5 million barrels a day, with a concomitant reduction in foreign exchange revenues. This compounds the problem noted above, that oil prices are not as high as they previously were.
In Riyadh’s perception, a nuclear power programme could free up extra oil for export, thereby enabling it to simultaneously earn more revenue, retain market share and reduce the carbon emissions it produces. It seeks, therefore, to build one large plant with a capacity of 1200MW to 1600MW and a number of smaller reactors, mainly for use in desalination projects.
It was reported in late March this year, that US Energy Secretary Rick Perry approved six secret authorisations for US companies to sell nuclear power technology and provide the associated technical assistance to Saudi Arabia. Those authorisations would permit the companies to carry out preliminary work prior to any agreement being reached, but not to ship equipment that would be used in a nuclear plant. The companies involved are believed to have requested that the Trump Administration keep the authorisations secret. The other vendor countries are said to include Russia and South Korea.
There has been a degree of concern expressed internationally about providing an authoritarian government with sensitive technology. There is some validity to that caution. Saudi Arabia has shown itself to be impervious to world opinion in prosecuting the war in Yemen, seemingly unmindful of the toll of civilian deaths and suffering. The murder of a journalist in the Saudi embassy in Turkey only added to those concerns. The main concern is that the disregard shown by Riyadh towards international opinion in both instances could be repeated in the event that the technology is misused in the future. If the kingdom wished to pursue an alternative source of energy, sceptics suggest, it could utilise a resource that is freely available and in plentiful supply in the kingdom: sunlight.
Solar power could be harnessed to generate electricity, it does not produce carbon emissions and could reduce domestic consumption of oil and gas. Riyadh’s apparent disregard for that source of energy would appear to suggest, however, that meeting carbon emissions reduction targets is not very high on its list of priorities. It is that situation, combined with an intense focus on obtaining nuclear technology and an insistence on mining uranium on its territory, rather than purchasing it far more cheaply from foreign suppliers, that give cause for worry.
The antipathy of Crown Prince Mohammed bin Salman towards Iran is well-documented. Reports indicate that he stated: ‘Saudi Arabia does not want to acquire any nuclear bomb, but without a doubt if Iran developed a nuclear bomb, we will follow suit as soon as possible.’ He was also reported to have said that any future war against Iran would be fought in Iran.
Given that degree of antagonism, it appears that the concern expressed over giving nuclear technology to Saudi Arabia is justified to an extent. It could be that Riyadh plans to use the nuclear programme itself as a deterrent against Iran’s own nuclear programme. If, on the other hand, the goal is to use the civilian nuclear programme as a stepping stone towards developing nuclear bombs, refusing to give Riyadh that technology, no matter that it could acquire it from, say, Pakistan, is the sole option open to the US.
Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.
This article was published by Future Directions International Pty Ltd on the 19th of May 2019.