Department of International Relations and European Studies1
Current Trends: Nuclear Energy
Developments in CEE and the Business
Strategy of Rosatom State Nuclear
Corporation
doc. PhDr. Tomáš Vlček, Ph.D.
tomas.vlcek@mail.muni.cz
Department of International Relations and European Studies2
Contents
̶ Importance of the Topic in the 21st Century International Relations
̶ What is Rosatom
̶ Specifics of Nuclear Energy Sector
̶ Rosatom‘s Presence in CEE
̶ Principles of Rosatom‘s Business Strategy in CEE and Beyond
Department of International Relations and European Studies3
Importance of the Topic
̶ Russian energy policy: clear evidence of relation between hydrocarbons export and
power projections / foreign policy goals (strategic approach to energy policy)
̶ Energy transition efforts (Russia's Energy Strategy 2030 and 2035) and slow shift
from hydrocarbons towards other technologies and sources in client countries / world
is a source of concern
̶ Dependence of Russian economy on hydrocarbons export (51% of federal income; 70% of export; 20% of GDP)
̶ Existence of finances for the Russian political systém is clearly connected with powerful and robust energy
industry
̶ Russia's ability to project its power is directly dependent on a working energy industry and the export of energy
commodities
̶ Therefore, Russia has taken active steps to diversify energy exports
̶ Diversification efforts (new routes, new clients, new deposits) within the hydrocarbons sector
̶ Diversification towards nuclear energy exports part of Russian strategy
Department of International Relations and European Studies4
Importance of the Topic
̶ Indisputable ties to the Russian government and foreign policy goals
̶ The President of Russia sets Rosatom’s strategic objectives, and appoints its director and the members of its
supervisory board.
̶ Dependence of RF on export of energy commodities
̶ Rise of RF on the international scene and Russian revisionism
̶ Ties to the Russian army (27% of Rosatom‘s revenues)
̶ “Надежное обеспечение обороноспособности России — главный приоритет работы атомной отрасли.”
(РИА Новости, 25.12.2017)
̶ Key high-tech industry in RF, dominating the world market today
̶ Highly assertive export strategy adopted in 2011
Department of International Relations and European Studies5
Importance of the Topic
̶ In 2011, Rosatom adopted a new long-term export strategy that aims, among other
things, to:
̶ have 50% of the company 's revenues from foreign contracts by 2030
̶ get among the top 3 in all segments of the world nuclear market
̶ have up to 78 projects abroad
̶ have 42% share in enrichment by 2030
̶ have 22% of fuel production by 2030
̶ In 2012, the objectives of the state program of development of the nuclear industry
were approved by the Government in 2014
̶ Support 900 billion rubles
̶ Among other things, the aim is…… „achievement of geopolitical tasks with paramount and decisive significance
for reliable guarantees of Russia's national security and sovereignty.“ (Government of the Russian Federation,
2014)
Department of International Relations and European Studies6
What is Rosatom
̶ Министерство атомной энергетики и промышленности СССР 1989-1991
̶ (Ministry of Atomic Energy and Industry of the USSR)
̶ Министерство Российской Федерации по атомной энергии 1992-2004
̶ (Ministry of Atomic Energy of the Russian Federation)
̶ Федеральное агентство по атомной энергии 2004-2007
̶ (Federal Agency for Atomic Energy)
̶ Государственная корпорация по атомной энергии «Росатом» 2007̶
(Rosatom State Atomic Energy Corporation)
̶ CEO: Алексей Евгеньевич Лихачёв (Aleksei Evgenevich Likhachev)
̶ until 10/2016 Сергей Владиленович Кириенко, Sergei Vladilenovich Kirienko
̶ (2016 - First Deputy Chief of Staff, 2022 - administration of Russian-occupied territories of Ukraine, sanctioned over the Alexei
Navalny poisoning)
Department of International Relations and European Studies7
What is Rosatom
̶ Over 400 companies and 288,500 employees
̶ scientific research organizations
̶ development of nuclear energy
̶ the growth of enterprises of the nuclear fuel cycle
̶ the nuclear weapons complex
̶ ensures national security (nuclear deterrence)
̶ nuclear and radiation safety
̶ international obligations in the field of the use of nuclear energy and of non-proliferation of nuclear materials
̶ the world's only nuclear icebreaker fleet
̶ nonprofit organization
̶ wholly owned by the Russian Federation directly, bypassing the Federal Agency for State Property
Management
̶ not (!) subordinated to Federal Service for Ecological, Technological and Nuclear Supervision
(Rostechnadzor) – both directly under Government
Department of International Relations and European Studies8
What is Rosatom
Department of International Relations and European Studies9
What is Rosatom
Department of International Relations and European Studies10
What is Rosatom (2022)
̶ Ranked 2nd in world uranium deposits and survey
̶ Ranked 3rd in uranium mining (13% share)
̶ Ranked 1st in foreign projects (23 units)
̶ Ranked 2nd in installed capacity (27,1 GWe)
̶ Ranked 1st in enrichment (36% share)
̶ Ranked 3rd in nuclear fuel fabrication (17% share after West and Fram)
̶ Largest producer of electricity in Russia (223.4 TWh; ca. 20% share)
̶ Concrete projects: Rooppur, Bangladash; Astravets, Belarus; Kudankulam, India; Akkuyu, Turkey; El Dabba, Egypt;
Paks, Hungary; Bushehr, Iran; Tianwan and Xudabao, China; Metsamor, Armenia (?)
̶ Memorandas: Burkina Faso, Burundi, Chile, Costarica, Mali, Mongolia, Nicaragua, Syria, South African Republic,
Cuba, Saudi Arabia, Paraguay, Thailand, Malaysia, Indonesia, Brasil, Nigeria, Jordan, Kazachstan, Kyrgyzstan,
Tajikistan, Argentina, Algeria, Vietnam, Uzbekistan, Rwanda, Zambia, Mongolia, Sudan, Ghana
Department of International Relations and European Studies11
What is RosatomOwnership Structure of Russian Nuclear Energy Companies
Company Shareholders Share (%)
Rosatom State Atomic Energy Corporation Government of Russian Federation 100
ZAO AtomStroyExport Rosatom State Atomic Energy Corporation
AO VPO Zarubezhatomenergostroy
OAO TVEL
OAO Gazprombank
78.5362
9.4346
1.3303
10.6989
OAO OKB Gidropress Experimental Design Bureau OJSC Atomenergomash 100
OAO TVEL OJSC Atomic Energy Power Corporation Atomenergoprom 100
JSC NIAEP OJSC Atomic Energy Power Corporation Atomenergoprom 100
JSC Atomic Energy Power Corporation Atomenergoprom Rosatom State Atomic Energy Corporation 100
JSC Inter RAO UES Rosneftegaz Group
FGC UES Group
Minorities*
INTER RAO Capital
Norilsk Nickel Group
VEB
RusHydro Group
27.63
18.57
16.65*
13.93
13.21
5.11
4.92
OJSC Atomenergomash OJSC Atomic Energy Power Corporation Atomenergoprom
CJSC AEM Leasing
INTERNEXCO GMBH
OFEJSC Techsnabexport
LLC Energomashkompleks
80.6296
2.3673
9.0896
2.8481
0.0453
* The minorities include ZAO AtomStroyExport, OJSC Rosenergoatom Concern, Rosatom Securities Limited. All these companies are part of the Rosatom State Atomic Energy
Corporation which thus owns 13.42% stake in JSC Inter RAO UES.
Department of International Relations and European Studies12
Specifics of Nuclear Energy Sector
̶ structural differences to natural gas, oil etc.
̶ not dependent on certain infrastructure and uninterrupted flow of energy supplies that cannot be
easily taken from another supplier
̶ path dependence
̶ the experience obtained in history during construction, commissioning and operation as well as the
existence of downstream industries and education and training system with ties to selected
technology and infrastructure is a strong prerequisite for future decisions in public tenders
̶ limited opportunitites for exerting political influence
̶ it is rather economy of a nuclear power projects driven by the high initial cost of construction which
can run into many billions of Euros that is of the most crucial concern
̶ the initial stage, where financing and/or finding strategic partner is usually being secured, crucial and
simultaneously most sensitive in terms of potential influence exerted by an external actor
Department of International Relations and European Studies13
Specifics of Nuclear Energy Sector
̶ bilateral negotiations typical instrument for securing deals
̶ EU is an exception
̶ economy-driven sector
̶ state support in bargaining due to limited business opportunities and limited number of players
̶ working competitve markets in all nuclear subsectors
̶ worldwide business
̶ no regional markets
̶ the enormous price of every NPP construction project per se makes it extremely attractive for the
contractors given the limited amount of such projects worldwide
̶ given the limited amount of contracts in the nuclear sector and the revenue implications of each one, any
attempt to use a nuclear contract as leverage on a particular country would cause substantial damage to
any contractor's reputation – a strong backfire effect
̶ this fact diminishes the possibility of a nuclear contractor exerting political pressure over a sovereign client,
as contractors with damaged reputations would find themselves in a difficult situation regarding future
business prospects worldwide
14
Rosatom‘s
Presence
in CEE
15
Rosatom‘s
Presence
in CEE
Department of International Relations and European Studies16
Rosatom‘s Business Strategy Principles
̶ There is no uniform strategy, tools to enforce the contract chosen according to the
business environment
̶ In friendly regions, bilateral negotiations are immediately launched (eg Hungary, Belarus…)
̶ In neutral regions usually tender (eg Czech Republic)
̶ In opposing regions competes with alternative projects (eg Visaginas vs. Neman)
̶ In principle, it does not break the law, but bends it to the maximum and uses every
possibility - typically the Russian “law vs. ethics” approach
Department of International Relations and European Studies17
Case Study: Baltic NPPs
Source: Bellona
Department of International Relations and European Studies18
Case Study: Baltic NPPs
Stalled since 2015
Suspended in 2013
Planned start-up in 1/2020 (Unit
1) and 7/2020 (Unit 2)
Source: Bellona
Department of International Relations and European Studies19
Visaginas NPP (Lithuania)
̶ Project started in 2006
̶ Originally joint project of LIT, LAT, EST and POL
̶ Strategic investor and technology supplier Hitachi-GE (1350 MW ABWR)
̶ In 2012 POL withdrew from the project; equity structure:
̶ 20% Hitachi-GE Nuclear Energy
̶ 20% Latvenergo (330 MW)
̶ 22% Eesti Energia (363 MW)
̶ 38% Lietuvos Energija (657 MW)
̶ Consultative referendum in 10/2012 in LIT, 62.7% voters against
̶ Following Russia‘s annexation of Crimea the project accelerated
̶ Given the reluctancy in cooperation from POL and other Baltic countries, opposition from inhabitants
and problems with financing, the project is stalled since 2015
Department of International Relations and European Studies20
Neman NPP (Kaliningrad Oblast, Russia)
̶ Idea from 1990s, project started roughly in 2008
̶ Rosatom used this project to rival the Visaginas NPP (where Russian bid was not allowed) since the
Baltic region is too small to accommodate more than one NPP
̶ Two units of VVER-1000 were originally intended to be constructed at Neman, but later enhanced to
two VVER-1200/V-491 units
̶ Neman NPP has been promoted not as a source of electricity for Kaliningrad Oblast, but since
the beginning as source of electricity to be exported to foreign countries, namely Germany,
Poland and the Baltic countries
̶ 87% of the electricity produced were planned to be exported to Germany, Poland and Baltic States
based on the mid 2011 business plan
Department of International Relations and European Studies21
Neman NPP (Kaliningrad Oblast, Russia)
̶ Even though the construction started in February 2010, a search for strategic investor was not finished
before the construction started
̶ The logic was to sell 49% of the Neman NPP to foreign investor, while the control share of 51% will
remain in the hands of Russia
̶ The original plan was to start commercial operations in 2017 (Unit 1) and 2018 (Unit 2)
̶ Since basically all of the regional countries had troubled history with Russia or Kaliningrad, no investors
and no electricity sales were in the end secured (even though Germany and Poland supposedly
participated in negotiations with JSC Inter RAO UES)
̶ Russia will however not resume the construction of Neman NPP no matter what the official
statements of Rosatom are
Department of International Relations and European Studies22
Astravec NPP (Belarus)
̶ Idea renewed in 1991, postponed in 1998
̶ Revived and restarted in 2006-8 following the 2004 (and 2006-2007) Russia-Belarus natural gas
disputes
̶ Russian state-owned Vnesheconombank provided USD 10 billion loan including USD 3 billion
investment into new infrastructure to accommodate the remoteness of Astravets in northern Belarus
̶ The loan is for 25 years to finance 90% of the contract between Atomstroyexport and the Belarus
Directorate for Nuclear Power Plant Construction.
̶ The construction started in 11/2013 (Unit 1) and 5/2014 (Unit 2) and originally should have finished in
2016 (Unit 1) and 2018 (Unit 2). However, these dates were revised and NPP started in November
2020 (Unit 1) and November 2023 (Unit 2).
Department of International Relations and European Studies23
Astravec NPP (Belarus)
̶ The electricity systems of Baltic States operate on the grid of Belarus, Russia, Estonia, Latvia and
Lithuania (BRELL) which is a part of IPS/UPS system controlled by Moscow
̶ However, „to disconnect from the Russian energy system and to achieve synchronization with the
European system is the strategic priority for Lithuania“ (PM of LIT Skvernelis)
̶ In May 2016 the Lithuanian parliament even accepted a resolution to “never accept electricity from the
Astravets NPP.”
̶ Against WTO rules, difficult to implement
̶ The three Baltic States together agreed to break up the BRELL and de-synchronize from the IPS/UPS
system by 2020 (in 2023 postponed to 2025, accelerated after the war)
̶ Lithuanian plan, unrealistic, it will not happen before 2030
̶ The three Baltic countries are not unified in this matter
̶ BEL/LIT border is a market entry for all electricity flows from Belarus and Russia, as well as for NORDPOOL. Should Lithuania
unilaterally introduce any tariffs, the price of electricity will rise for all Baltic countries
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Astravec NPP (Belarus)
Department of International Relations and European Studies25
Astravec NPP (Belarus)
̶ (especially) Lithuanian statements about poor safety of the Astravets NPP, unsuitability of the site,
project violations and the pressure to comply with Espoo and Aarhus conventions (Ministry of Foreign
Affairs of the Republic of Lithuania, 2017; see below) is a strategy to delay the construction and the
start up.
̶ Since the official de-synchronization target is 2020 and the expected start up of Astravets NPP Unit 1 is
currently mid-2019, Lithuania is left with the only tool to delay it: political pressure at all possible
platforms.
̶ This is done mainly by framing the Astravets project unsafe, dangerous and incompliant with
international safety standards.
̶ Two major setbacks:
̶ Reluctance of LAT and EST
̶ Impossibility to de-synchronize before 2030
Department of International Relations and European Studies26
Astravec NPP (Belarus)
̶ If we accept the logic electricity from Astravets will not be used in the Baltics (which is not certain),
three options remain:
̶ to consume electricity within the country at the expense of domestic gas fired power plants (likely)
̶ to restrict the output of the Astravets NPP (unlikely)
̶ to export the excess electricity to Russia (likely)
̶ Around 98% of electricity in Belarus is produced by combustion of natural gas supplied by Russia. There are 17
thermal power plants in Belarus, most of them operating on natural gas and in a very bad condition being
constructed in 1960s and 1970s.
̶ The natural gas import dependency is expected to be reduced by 20-25% and based on the INPRO Methodology for
Nuclear Energy System Assessment the levelized electricity price resulted at 5.81 cent/kWh (compared to 6.76
cent/kWh for natural gas).
̶ The export to Russia is a possibility given the Smolensk NPP close to the Russian border is expected to shut down
two of its three RBMK-1000 units by 2028 and 2030 respectively.
Department of International Relations and European Studies27
Astravec NPP (Belarus)
̶ Therefore currently the most likely development is the consumption of majority of electricity produced in
Astravets NPP within Belarus at the expense of the old natural gas fired power plants complemented
with exports to Russia.
̶ What is definitely certain at the moment is that without the possibilities to export electricity to the Baltic
countries and/or European Union, the construction of Units 3 and 4 (proposed for about five years later)
will never be realized.
Department of International Relations and European Studies28
Rosatom‘s Business Strategy Principles
̶ Business model supported with financial model
̶ Besides generally accepted and sector-wide used options by all contractors, such as
̶ vendor investments
̶ being a strategic investor in the project
̶ providing financial loans by national and private banks
̶ the turnkey-basis option
̶ Rosatom developed the option where the contractor is the subject who pays for the construction: BOO
contracts
̶ loans, ability to prepare a tailor-made contract for a business partner, presence at all stages of the nuclear
fuel cycle
̶ Procedure:
̶ Interagency Memorandum of Understanding - Intergovernmental framework agreement - Power plant
̶ (Mis)use of path dependence in nuclear energy and its active creation
̶ „Nuclear power plants serve as Russian embassies.“ (Armstrong 2015)
̶ Rosatom tries „to influence and bind countries around the world to its irredentist and revanchist aims“. (Saha 2017)
̶ Rosatom „builds spheres of energy dependence“. (Freeman 2018)
Department of International Relations and European Studies29
Rosatom‘s Business Strategy Principles
̶ „Shotgun strategy“
̶ “Rosatom strategy in the new entrant countries is to conclude an
Intergovernmental Agreement, supporting infrastructure development and
agreeing on financial arrangements to support nuclear programme
development”
̶ Jukka Laaksonen, vicepresident Rusatom Overseas, 2013
̶ Principles of Standard Russian offer:
̶ no tendering
̶ loans at fixed interest rates (credits up to 80% of the investment) or
Russian ownership required
̶ „Package deals”: gas price discounts in BG, HU parallel to contracting
̶ downplaying regulatory aspects
̶ high localization rates (40-70%)
̶ extremely long-term strategy
Department of International Relations and European Studies30
Rosatom‘s Business Strategy Principles
̶ Intergovernmental framework agreements (2024)
̶ Algeria, Armenia, Bolivia, Dominican Republic, Ethiopia, Ghana, Cambodia,
Congo, Cuba, Laos, Myanmar, Nigeria, Paraguay, Rwanda, Saudi Arabia,
United Arab Emirates, Serbia, Sudan, Tajikistan, Uganda, Zambia,
Zimbabwe
̶ Projects (2024)
̶ Bangladesh (2017-), Belarus (2013-2023), China (2015-, 2021-), Egypt
(2022-), India (2017-), Iran (2019-), Turkey (2018-), Hungary (2025?)
Department of International Relations and European Studies31
Rosatom‘s Business Strategy Principles
̶ Intergovernmental framework agreements
̶ Algeria, Armenia, Bolivia, Dominican Republic, Ethiopia, Ghana, Cambodia,
Congo, Cuba, Laos, Myanmar, Nigeria, Paraguay, Rwanda, Saudi Arabia,
United Arab Emirates, Serbia, Sudan, Tajikistan, Uganda, Zambia,
Zimbabwe
̶ Projects
̶ Bangladesh (2017-), Belarus (2013-2023), China (2015-, 2021-), Egypt
(2022-), India (2017-), Iran (2019-), Turkey (2018-), Hungary (2025?)
Department of International Relations and European Studies32
Is Russia Able to Finance the Reactors?
̶ Sovereign wealth funds
̶ National Wealth Fund (Фонд национального благосостояния России)
̶ 2008, 88 billion USD
̶ invests in riskier, higher return vehicles, as well as federal budget expenditures
̶ controlled by the Ministry of Finance
̶ one of the fund's main responsibilities is to support the Russian pension system
̶ source for Finland, Hungary etc.
̶ Reserve Fund (Государственный резервный накопительный фонд)
̶ 2004 as Stabilization Fund, divided in two in 2008, 137 billion USD
̶ invested abroad in low-yield securities and used when oil and gas incomes fall
̶ intended to cover budget deficit and provide payment of the public debt
̶ created also from gas export revenues
̶ January 2016: „ Russia would suspend granting any new loans to foreign countries, including for
nuclear projects, due to budget cuts, but all previous loan agreements would be fulfilled.“ (Sergei
Storchak, deputy finance minister)
̶ January 2018: NWF incorporated into RF, total value 65 billion USD, used to cover budget deficite
Department of International Relations and European Studies33
Rosatom‘s Business Strategy Principles
̶ Current research confirms fulfillment of indicators of strategic (realistic, geopolitical) approach to energy
policy also in the nuclear sector
̶ What are the aims and interests, is it really a "mere" opening of new markets to ensure revenue for the
Russian state budget for 2060+ or a (future) influence tool in strategic regions (Egypt, India,
Bangladesh, Baltic, EU)?
̶ Russian documents speak of nuclear energy as a new export commodity, does it also mean that
Rosatom will be a new instrument for promoting and supporting Russia's foreign policy goals, like
Gazprom or Rosneft?
Department of International Relations and European Studies34
Thank you for your attention.