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Why Will Saudi Arabia Go For Nuclear Power? It's All About Water...

Date 18/04/2007
Smart Commodities UK | By Garry White

“Everybody’s going for nuclear programs”, said Jordan’s King Abdullah II in a January interview with Israeli newspaper Haaretz. “The rules have changed”.

So what exactly did the King mean by “The rules have changed”?

A significant amount of the world’s oil reserves are to be found in the Middle East, which is a politically unstable part of the world. It is easy to see the arguments that would drive countries such as the US to reduce their reliance on imported oil from the region. At first glance, what is harder to understand is why the oil producing nations would want to go nuclear. But it’s obvious really.

Take Saudi Arabia. The Kingdom had completely ruled out a nuclear programme -until recently. It also claims to have more than 50 years worth of oil reserves sloshing around in its oil fields. Surely that’s more than enough to meet its own energy needs as well?

Despite its oil reserves – real or not - the Saudis are looking at the feasibility of building nuclear reactors. So why the change of heart..?

Neo-con paranoia

An article in the New York Times on Monday tried to explain this. The argument goes that because Iran has developed a nuclear programme its neighbours are concerned about the prospect. If Iran is going to have the bomb, then they want it too.

This argument opens the prospect of a new nuclear arms race spreading like wildfire across the Middle East. This is a scary prospect; and one that sparks interesting, noticeable headlines and debate.

While this argument may play well with the Donald Rumsfelds and Dick Cheneys of this world, I don’t really believe it. I think the situation is actually a lot simpler than the paranoid hawks would have us believe. I think this latest interest in nuclear power by Middle Eastern countries has nothing to do with nuclear warheads. I think it’s all down to water. They don’t have enough of it.

There is a demographic timebomb in the Middle East. It’s the opposite of what we are facing here, but its implications are just as serious. While our populations are aging significantly, the Middle East’s population is skewed toward youth. This is both a strength and a weakness.

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The country does not have a pension crisis like most western countries – but it has a massive population explosion to contend with – and it’s coming very, very soon.

In Saudi Arabia 40% of the 27 million people that live in the Kingdom are less than 14 years of age. That’s almost 11 million people. A mere 2.4% of the population is more than 65 years old. Think about that for a moment. The implications really are quite staggering.

The Saudi Kingdom is going to see a massive explosion in its population over the next 20 years – and it therefore has to find adequate water supplies for its population’s needs – and the country does not have the infrastructure to cope.

The Kingdom is already the world's largest producer of desalinated water. It currently has 27 desalination plants which provide 70% of its drinking water requirement. But it will need more. Much more.

Several new desalination plants are under construction, with the aim of meeting a capacity of 800 million gallons a day. But this is unlikely to be enough to support the country’s population timebomb. I believe the rulers of this nation know this. When you live in a desert, water is always on your mind.

Borat was a fraud - I love Kazakstan…

Nuclear desalination is a fact, not a theory.

Desalination is an energy-intensive process – and yet again we find ourselves looking to the glorious nation of Kazakhstan which has taken the lead. The country really isn’t as backwards as Sacha Baron Cohen would have us believe.

As well as being one of the world’s major uranium producers, it has also been producing water by nuclear desalination for almost 30 years. It is the model that the Saudis, the Jordanians and the Egyptians will look to.

Kazakhstan’s BN-350 fast reactor at Aktau has successfully produced up to 135 MWe of electricity and 80,000 m3/day of potable water over the last 27 years, with around about 60% of its power being used for the heat and desalination process. It is now a proven technology, thanks to our Kazakh chums.

Then there’s Japan...

It has ten desalination facilities linked to pressurised water reactors operating for electricity production. They have yielded 1000-3000 m3/day each of potable water. India has also got in on the act. In 2002 it set up a demonstration plant coupled to twin 170 MWe nuclear power reactors at its Madras Atomic Power Station.

I believe the Saudis will go nuclear – and I expect to hear news of moves towards the construction of nuclear power stations soon. Very soon. If you believe Saudi Oil Minister Ali al Naimi, the country has 50 years of oil left. I am sceptical on this point. However, the water issue is one they cannot afford to ignore and one they cannot hide underground – and the rulers of the Kingdom know this.

I am confident that all the oil-rich nations will go nuclear in the end. It’s all in the water…

P.S. If you enjoyed this article then sign up for Smart Commodities UK. It’s dedicated to searching out the investment trends that could provide our biggest profit opportunities for the next decade…
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