UPDATE 2-UAE approves first Gulf Arab nuclear plant

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* South Korean consortium can begin construction on Wednesday

* Licence granted for the first two reactors

By Maha El Dahan

ABU DHABI, July 18 (Reuters) - The United Arab Emirates will be the first Gulf Arab state to start constructing a nuclear power plant in the region, where top oil exporters seek alternative energy resources to meet the soaring electricity demand that threatens to absorb their precious oil and gas reserves.

UAE's nuclear regulator said on Wednesday that it granted a licence to Emirates Nuclear Energy Corp (ENEC) for the construction of the OPEC member country's first two nuclear reactors, which will be built by a South Korean-led consortium, a project worth billions of dollars.

Japan's Fukushima nuclear accident in March 2011 has prompted several countries to think twice about their atomic ambitions but nuclear remains an attractive option for the oil-producing Gulf Arab states, including top oil exporter Saudi Arabia, where power demand is set to soar in the next decade.

The UAE's nuclear regulator said the construction licence was granted following thorough evaluation of eighteen months and this project would avoid mistakes made in Japan.

"We have tried to learn as many lessons as we could from Fukushima, and we asked ENEC to address the issue in a report, which they did," said William Travers, director general of the Federal Authority of Nuclear Regulation (FANR).

UAE will be the second country in the region that is developing a national nuclear programme after Iran, whose Russian-built Bushehr plant is part of its nuclear programme.

Iran's atomic ambitions have been characterised by the West as being a front for covertly trying to develop nuclear weapons. Tehran denies the accusation.

"We will continue to be conscious of our responsibility that nuclear power in the UAE is used safely, securely, and only for peaceful purposes," Travers said in a statement.

Top oil and gas exporters in the region have been working to save their huge oil and gas reserves for export rather than use them to generate electricity and the UAE is not the only one.

Saudi Arabia, home to some of the world's largest oil and gas fields, is also expected to finalise its atomic energy plans this year in the face of fast-rising demand for electricy driven by booming petro-dollar spending.

The world's top liquefied natural gas (LNG) exporter Qatar and others such as Jordan, Algeria and Kuwait have been considering the nuclear path.

In December 2009, the UAE awarded a group led by Korea Electric Power Corp (KEPCO) a contract to build four nuclear reactors to meet surging demand for electricity.

The consortium plans to build and operate the 1,400 megawatt reactors; the first is expected to start operating in 2017, and the others by 2020.

ENEC has been waiting for the licence before it starts pouring concrete for the first two reactors at the Braka site, located on the west of UAE's capital Abu Dhabi. "We have been notified that they will start putting concrete on the site as early as today," Travers said.

UAE is also the first country to authorise the construction of its first nuclear power plant since China did so in 1981, Hamad Al Kaabi, the UAE permanent representative to International Atomic Energy Agency (IAEA) said.

The licence granted on Wednesday was for the first two reactors but Travers said applications for the others could come soon as well. "This is up to ENEC but we have been told informally to expect an application before the end of the calender year," he said.

Before granting the contract to the South Korean consortium, the UAE signed an agreement under the U.S. Atomic Energy Act with the United States in early 2009, forfeiting its right to enrich uranium domestically.

ENEC said last year that it will finalise its fuel procurment plans in the first quarter of 2012 and that it was in talks with a number of countries including Australia and Russia to buy fuel. But the process is still ongoing.

"This is ENEC's responsibility but we know that they are working on contracting fuel supply and we will hear something very soon from ENEC," Travers said.

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