The industrial AREVA group enters the year 2007 in a bad mood. The current problems of French nuclear engineers are so severe that one can start thinking if the French nuclear giant will keep itself as an independent player on global nuclear market?
The experts say there are serious difficulties at Olkiluoto-3, the site of first EPR-1600 reactor unit. In May 2006, the AREVA group accepted here nine month delay. The customer, Finnish TVO company, argues that the real situation is even worse and the reactor will be commissioned two years behind the initial schedule (year 2009).
The Olkiluoto failure is aggravated by the financial problems, namely, sharp drop of net income, which is fall by 64.7% (115 millions euro) in first half of 2006. The final value of income drop could be even more annoying for shareholders (300 millions euro).
More fuel to the flame is added due to the uncertainty related to the future penalties for Olkiluoto-3 delay. The TVO company does not comment still how much they will lose. However one can say that some of these losses would be compensated by the AREVA group and French taxpayers. According to the independent experts estimations, the size of compensation would be equal to tens or even hundreds millions euro.
The insolvency of French nuclear industry shown in Olkiluoto was not unexpected for the Greenpeace environmentalist organization. Last June, their activists hold a meeting in Helsinki under the slogan Stop EPR - French nuclear disaster.
As the Greenpeace said, the AREVA personnel has failed to provide the proper quality control and assurance for the reactor vessel welding operation, and it caused the extra-work for correction activities. Also, the signs of non-conforming quality have been detected in concrete production for the reactor base. The annoying Finnish society began to criticize the regulatory body STUK claiming that the situation on Olkiluoto-3 is going out of control.
The careful analysis of the AREVA group activities in 2006 shows that the French nuclear engineers prefer to battle with arising problems by reducing of payment for whole project. In such a way, all the problems would be kept unnoticed and unsolved. This prejudices the reactor's safety and reliability and causes the Finnish side to think about the expediency of project continuation.
Therefore, the TVO leadership together with STUK experts expressed in second half of 2006 their explicit dissatisfaction with the process of Olkiluoto-3 construction. Responding to the critics, AREVA CEO Anne Lauvergeon urged to replace the chief manager of Finnish project and to appoint on this position Philippe Knoche, 37. This staff rearrangement became one more confirmation of AREVA miserable failure in Finland.
President & CEO of AREVA NP Vincent Maurel relates the root of all problems to insufficient speed of documentation flow. He says that the group has difficulties with timely performance of works, and the preparation and analysis of all documentation takes more time than it was supposed. His Finnish colleague TVO's Martin Landtman argues that construction and manufacturing delays are the reason of total delay.
However many French researchers specialized in nuclear field do not want to accept the perfunctory explanations and prefer to find the real reasons of AREVA failures. Not so long time ago - in 70th-80th - the French nuclear industry had the unique experience of ambitious nuclear program realization, up to 12 new reactors per year. But the gas pause affects in quite complete collapse of nuclear monopoly. The reactor industry of France was turned to the foreign markets and sequestered. The last French reactor unit was commissioned in 1999.
The good example of AREVA's competitive strength loss is the results of recent bid for four reactors in southern China where the French suffered an ignominious defeat from U.S. Westinghouse. Talking about the China nuclear bid, French financial and industrial minister Thierry Bretona said - problems in Olkiluoto and loss in Chinese bid show that the AREVA group is out of good conditions now.
Paris explains that the Chinese decision to acquire the AP-1000 reactors was conditioned by the unwillingness of the AREVA group to transfer the EPR-1600 technology, which was allegedly one of Chinese demands. But Beijing does not agree with this. The Chinese learned from Olkiluoto lessons that the AREVA group is artificially overstated its capacities and is proposing unrealistic schedules and prices. As a result, it will cause the bad quality of work, the changes of initial contractual conditions and the delays in project fulfillment. This is the real reason for final decision of China to pick the American reactors rather French ones.
New manager of Olkiluoto project Philippe Knoche confirms that the AREVA group overestimated its power - the initial construction schedule was too intensive. Some people say, however, that the initial schedule was based on very precise calculations, but the AREVA group simply can not fulfill it.
One more key factor with negative effect to the AREVA capacity is the brain drain. The group is lost highly experienced personnel, first of all, engineers. If the task to restore the industrial capacity seems to be solvable then the human resource compensation could be impossible for the AREVA in its current state.
The staff lack damages the innovation potential of the AREVA group. Once being the world leader, the French fast breeder program is now lost many of its superiority features. The government decided to finally close the Superphenix reactor, and the Phenix facility was out of operation for decade.
The engineer weakness of AREVA group can explain the gap between the EPR-1600 and AP-1000 projects. The Chinese financial weekly Caijing mentions that the AP-1000 reactor from Westinghouse is simpler in understanding and controlling, and its price is more competitive in comparison with the EPR-1600's one.
The misfortunes follow the French nuclear companies also in other parts of global nuclear market. In 2006, Ukraine requested to repeat the bid for new shelter construction in the Chernobyl NPP. Earlier, the French consortium NOVARKA was appointed as a bid winner; however, the Ukrainian experts stated their valid distrust to the French proposals.
The reason of Ukrainian distrust to the French nuclear companies is linked to the activities of Framatome ANP company who is a part of the AREVA group. The design errors for spent fuel storage project KhOYaT-2, introduced by Framatome engineers, lead to 7-year delay. Instead of 2003, the storage would be commissioned in 2010, and extra-payment requested by French company is equal to 85 million dollars. Last summer, Ukraine initiated the procedure of denouncing of contract with the Framatome ANP and warned that any French nuclear proposals will be considered in the future with high circumspection.
Once Winston Churchill said: "This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." This choice quotation of famous British politician is excellently applicable to the recent situation of the AREVA group. The 2006 failures did not get the end for the French nuclear giant; however, it forced to think about its place and role in the global nuclear market of fist half of XXI century.
SOURCE: AtomInfo.Ru
DATE: Feb 14, 2007
Topics: NPP, Europe, France, AREVA