President of Westinghouse Electric Jose Emeterio Gutierrez speaks with the Kyiv Post at the Hilton Kyiv hotel during his recent two-day trip to Ukraine. Photo by Konstantin Chernichkin
The global leader in nuclear fuel production, U.S.-based Westinghouse Electric, is so hungry for expanding its business in Ukraine that its president José Emeterio Gutiérrez visits the country at least twice a year.
“Ukraine is really, really a very critical customer for us,” Gutiérrez told the Kyiv Post at the Hilton Kyiv hotel during a recent two-day trip to Ukraine.
This makes sense, since Ukraine’s state nuclear power monopoly Energoatom is the company’s second largest customer in Europe after France in Europe. And nuclear energy is responsible for 60 percent of electricity generation in Ukraine.
Altogether Ukraine has 15 nuclear power reactors that have been inherited from the Soviet Union, all of which use the so-called Water-Water Energetic Reactors, or VVER reactors. And there are only two companies that manufacture VVER fuel — Westinghouse and Russia’s Rosatom.
Back in 2016, Rosatom was supplying nuclear fuel to almost all reactors leaving only two for Westinghouse. But now Westinghouse is providing fuel for two reactors in the South Ukraine complex and for four reactors in the Zaporizhzhia complex, which is the largest nuclear facility in Europe.
Today Westinghouse has about 200 employees in Ukraine. It also owns a 60 percent share of Westron, a nuclear manufacturing company based in Kharkiv and Kyiv.
But Westinghouse wants more.
New contract, old competitor
Back in January, Westinghouse Electric and Energoatom signed a new nuclear fuel contract extension. In addition to the six fuel units Westinghouse already supplies to, it will supply to one more reactor during 2020–2025.
Which still won’t satisfy the company’s appetite for the Ukrainian market.
With the new contract, Westinghouse will have a 46 percent share of Ukraine’s nuclear fuel market, meaning they will still be behind their only competitor, Rosatom. The Russian company sells the nuclear fuel to Ukraine through its subsidiary Twell.
Back in June 2017, Ukraine’s President Petro Poroshenko said in Washington D. C. that he wants Ukraine to get most of its fuel from Westinghouse and to reduce the role of Russia, a country that has waged war against Ukraine taking the lives of more than 10,000 people.
But the reality turned out quite differently for Westinghouse in January, as the contract amendment only added one more nuclear fuel reactor.
Was Westinghouse Electric upset? Gutiérrez wouldn’t give a straight answer.
“We have been working with this country under different administrations,” he said. “Obviously the administration has always had influence, especially in the energy sector in general and nuclear sector in particular. With the current administration we are working well.”
Asked if he thinks that Energoatom is giving more preference towards Russia’s Rosatom, Gutiérrez only said that “the current administration made statements several times that they want diversification” and that Westinghouse wants a fair and transparent competition.
And whether he believes Ukraine has fair competition in the nuclear energy sector, Gutiérrez would also not say.
His Swedish colleague Aziz Dag, Westinghouse vice president and managing director of its Northern Europe segment, says that his company can deliver more to Ukraine.
“I am not going to sit here and say that I am dissatisfied because I cannot be. I mean we are supplying seven out of the (15) nuclear power plants and for us it is a commercial company and it is a very good contract,” he said. “At the same time… we believe that we can supply more and that we can bring more value to Ukraine.”
Preferring to “set the politics aside” as his boss, Dag did make a parallel between Ukraine’s nuclear and natural gas energy sectors, hinting that Ukraine should drop Russian nuclear fuel like it dropped Russian gas.
“Why is Ukraine so focused on not buying any gas from Russia? I’m just putting that on the table and that’s the stretch I will do on the comments on the political side,” he said.
Danylo Lavrenov, spokesperson at Energoatom, told the Kyiv Post that it is difficult to say who the main supplier will be — Westinghouse or Rosatom — but said Energoatom’s continued relationship with Russia strengthens competition on the market.
“Our goal is not to completely switch to an American supplier. Our goal is to deliver as effectively as possible good quality fuel for the lowest price,” he said.
He would not say if nuclear fuel coming from Rosatom is cheaper than that from Westinghouse because of confidentiality.
“We purchased a lot of fuel from Westinghouse in 2017 and 2016 since we didn’t fully understand the position of our further cooperation with Russia,” Lavrenov said.
Canceling Russia as a supplier wouldn’t make sense, Lavrenov said, since it is a question of energy security: “If something happens to Westinghouse then it puts the whole energy system in danger.”
For Energoatom having two suppliers means less chance for a monopoly supplier to dictate the price and conditions.
But for Westinghouse, the market is not politics-free or fully competitive.
“I would say, in a market that would be fully liberalized, without any political influence we would have a bigger share of the market than what we have today, based on our competitiveness and excellent fuel performance,” Dag said.
Dag wants the Westinghouse share to be at least 60–70 percent instead of 40 percent.
Swedish plant
The fuel that Westinghouse delivers to Ukraine comes from its Swedish plant with some of the components coming from the United States’ Columbia, South Carolina plant as well.
The Swedish plant is one of the company’s largest ones outside of the U.S. with about 1,000 people employed. It has one of the largest fuel fabrication facilities in Europe as it delivers to all over the continent.
Of the 447 reactors across the globe, about 60 percent use Westinghouse technology. Westinghouse is currently under the process of being sold by Japanese Toshiba to Canadian Brookfield Asset Management in a $4.6 billion deal after the company went through two unsuccessful nuclear construction projects in the U.S. and had to file for bankruptcy.
Gutiérrez says that Ukraine shouldn’t be worried about the transfer of ownership.
Security and Russia
If Russia were to completely cut off its nuclear fuel supply to Ukraine, Westinghouse assures it will come to rescue.
The contract between Ukraine and Westinghouse has a clause that says that Westinghouse is obligated to cover all of the country’s 13 VVER‑1000 fuel reactors having a 12-month lead time.
But Dag says that Westinghouse could do it faster if it delivered to more reactors.
Westinghouse says it doesn’t know whether Energoatom buys extra fuel from Russia for reserve, but if that were the case it would be “quite unfortunate” that the oversupply is coming from Rosatom.
Corruption factor
But there is allegedly another problem that causes unfair competition in the nuclear sector — corruption.
Back in April 2017, ex-People’s Front party lawmaker Mykola Martynenko was arrested and charged with organized crime and embezzling $17 million during uranium ore sales to the state-owned Eastern Ore Dressing Plant. He was suspected of involvement in the uranium supply scheme, which is still being investigated by the National Anti-Corruption Bureau of Ukraine and Austrian authorities.
The Ukrainska Pravda online news websites reported in 2015 that Austria’s Steuermann Investitions, which Ukrainian media reported to belong to Martynenko, was selling Kazakh uranium ore at a huge profit to the state-owned Eastern Ore Dressing Plant, which buys uranium for Energoatom. The NABU suspects that the state-owned plant was buying the overpriced uranium and receiving kickbacks.
Martynenko denied any wrongdoing, calling the case fabricated and political.
Westinghouse’s Dag and Gutiérrez both said they didn’t know anything about the case.
The uranium that Energoatom uses is all domestic including the uranium used for the nuclear fuel provided by Westinghouse.
Now, Westinghouse is investing in qualifying subsidiary of Energoatom called AtomEnergoMash to supply Westinghouse with components to be used in the nuclear fuel fabrication in south Ukraine, according to Dag.
Westinghouse would also like to boost up its cooperation with Energoatom in providing engineering services for improving efficiency and output of reactors as well as manufacturing components in Ukraine.
Source: KyivPost
