Big Oil and Nuclear Energy

September 15, 2017

Earlier this month, the sovereign wealth fund of Oman decided to invest up to $120M in Berkeley Energy’s Salamanca uranium project. The investment includes an option for offtake.

With the largest nuclear build-outs occurring in countries like China, India and Russia, it’s easy to forget that the nuclear story is a global one and, while Oman has not yet given the go-ahead for reactor construction, many of its oil-producing neighbours in the Middle East are pushing forward aggressively. In fact, the UAE (United Arab Emirates) will see its first reactor come online next year, with three more under construction. Jordan has two reactors on order and Saudi Arabia has sixteen reactors in the proposal stage.

The fact that the home of big oil is embracing nuclear energy highlights the strong fundamentals underlying the sector.

Yes, uranium prices are still low, as we continue to chew through what has been a multi-year surplus. However, global reactor numbers are headed nowhere except upwards. This growth is being driven not only by the need to meet current power demands with clean energy but also to cope with the sharp increases that we will soon be facing.

As Berkeley Energy’s managing director, Paul Atherley, said during his interview with the Financial Times, regarding the Oman investment: “When you talk about EVs [electric vehicles] hooking on to the grid, there’s only one scalable answer.” He went on to say, Uranium prices are likely to be supported as operations that are losing money cut output and some utilities in the US and Europe look to secure new supply as their current contracts come to the end of their lives. In addition, the world’s largest uranium producer, Kazatomprom, is also looking to float next year.”

All of these are excellent points. Indeed, with the EV revolution likely to arrive faster and harder than many observers first anticipated, nuclear is going to come into its own.

It’s no coincidence that China – the country building what will eventually be the world’s largest nuclear reactor fleet – has also set aggressive, mandatory targets for the production and sale of EVs. Then you have France, the UK and the Netherlands seeking to ban diesel engines by 2040 and the EU considering a mandate on EV quotas.

No wonder the home of big oil wants to go nuclear.

Dev Randhawa, CEO and Chairman of Fission Uranium