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Cablegate: Estonia: Response to Civil-Nuclear Working

VZCZCXRO8648
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHTL #0431/01 3521451
ZNR UUUUU ZZH
R 171451Z DEC 08
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 0968
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 03 TALLINN 000431

SIPDIS
SENSITIVE

STATE FOR EUR/NB AND T (MARC HUMPHREY)
COMMERCE FOR SARAH LOPP AND ITA LEAH MARKOWITZ
ENERGY FOR MICHAEL APPICELLI

E.O. 12958: N/A
TAGS: ENRG TRGY BEXP BTIO KGHG PREL PGOV EN
SUBJECT: ESTONIA: RESPONSE TO CIVIL-NUCLEAR WORKING
GROUP QUESTIONS

REF: STATE 127423

1. (SBU) Embassy Tallinn's responses below are keyed
to questions in reftel. Questions are repeated below
for ease of reading. POC for follow-up questions is
Economic Officer Rob Hollister, Jr. at
hollisterrm@state.gov, tel. +372 668 8107.

-- Describe any plans for the development of nuclear
power in your country. Also, describe any existing or
planned nuclear power related facilities in your
country, such as uranium mining, if any. Do you
foresee an expansion of these facilities?

The Prime Ministers of Estonia, Latvia and Lithuania
agreed in 2006 (the Trakai Communique) to partner on
building a new nuclear power plant (NPP) to replace
the Ignalina plant at Visaginas, Lithuania. The NPP
was supposed to be in operation by 2015, but little
progress has been made in implementing the project
(which now also includes Poland). Recently, in public
discussions, GOE officials and other opinion leaders
have advocated in favor of Estonia building its own
NPP. However, there has been no government decision
on this yet.

The company Silmet was established in 1946 for the
production of uranium oxides. Silmet developed a
process for extracting uranium from black shale, which
is widely available in Estonia. It became the largest
phosphate-uranium operation in the former Soviet Union
and the site where uranium for the Soviet Union's
first nuclear weapon was refined. In 1990, Silmet
stopped refining uranium and there have been no
discussions on restarting the refining.

-- If your country is considering the pursuit of
nuclear power, describe the underlying motivations
(e.g., current or anticipated power shortages, energy
security, or other industrial uses, such as
desalination)

Estonia has a large domestic supply of oil shale.
This fuel is used in two power plants in eastern
Estonia which produce enough electricity to meet
domestic demand and for export. Production of
electricity using oil shale will become more expensive
as Estonian's allocation of "free" CO2 emission quotas
from the EU diminishes to zero by 2020. In
preparation for this, the GOE is actively assessing
alternate energy sources, including nuclear power. An
alternative to nuclear power would be gas, but Estonia
wants to avoid importing more gas for reasons of
energy security. (Note: Estonia imports of all the
gas it currently uses from Russia.)

-- If there are plans to pursue nuclear power,
describe the anticipated government role in the
financing of its civil nuclear sector. For example,
does the government plan to provide subsidies, tax
breaks, loan guarantees, or other financial
incentives? Would some or all nuclear power plants be
state-owned and operated? Would you seek financing
from international investment banks and organizations
or consortium arrangements?

In 2009, the GOE is scheduled to formally approve its
draft energy strategy for the period 2008-2018. The
plan includes several scenarios for nuclear
electricity production, including through
participation in a regionally-based power plant (e.g.
in Lithuania) or building a plant in Estonia. No
decisions on financing have been made. In 2009, the
GOE is also slated to begin drafting legislation that
will govern the use and control of nuclear power in
Estonia.

-- What are the names and titles of the key nuclear
decision making government bodies and top officials?

Einari Kisel, Deputy Secretary General of Energy,
Ministry of Economy and Communication

Andres Tropp, Head of the Nuclear Energy Department,
Eesti Energia (state-owned energy company)

TALLINN 00000431 002 OF 003

-- Does your country have an existing nuclear
regulatory authority? What are its
inspection/enforcement powers? If so, how large is it
(i.e., how many people does it employ)? If not, are
there plans to establish such an authority?

Estonia does not have a nuclear regulatory authority.
However, the GOE has acknowledged the need to
establish one in the future (if/when the GOE decides
to build a nuclear power plant in Estonia.)

-- Does your country have a domestic nuclear liability
law? If so, please summarize its major elements. In
particular, is there a minimum level of required
liability coverage required for operation? If your
country is not party to an international liability
regime, is there any consideration being given to
joining one? If so, which international liability
regime (Vienna Convention, Paris Convention,
Convention on Supplementary Compensation for Nuclear
Damage) is being considered.

Estonia does not have a domestic nuclear liability
law.

-- Is the manufacturing base in your country
(including high- tech components and heavy industry)
involved in nuclear- related products or services?
Does it seem likely that any components or contracting
services for new plants could be sourced locally, or
would the majority of these need to be imported?

Currently the manufacturing base is not involved in
nuclear-related products but there are companies which
were involved in nuclear related products and services
during the Soviet era. Estonia's manufacturing base
has some experience in nuclear- related services,
having recent success cleaning up Soviet-era
radioactive waste storage.

-- How extensive is your country's nuclear-trained
workforce? Does your country have a significant
engineering, technician and construction base that
could be readily converted into a nuclear workforce
(e.g., engineers, high precision manufacturing, robust
quality assurance programs, high-quality
construction)? Will the development of civil nuclear
power require a significant foreign workforce? Are
programs in place, or being developed, for training of
domestic personnel
(e.g., in skilled trades and nuclear regulation)?

It is unlikely that development of civil nuclear power
in Estonia will require a significant foreign
workforce. There is already a limited (less than 100)
nuclear-trained workforce, with experience primarily
in the area of managing nuclear waste. Estonia would
need approximately 250 skilled workers if the GOE
moves to build a local NPP. Estonia's energy strategy
identifies the need to establish training and
retraining programs for domestic personnel.

Opportunities for U.S. Industry
-------------------------------

-- Does your country have any current or anticipated
nuclear- related tenders? If so, please describe the
tender/selection process for new contracts, its
timing, and indicate any U.S. firms considering
bidding.

At present, there are no nuclear-related tenders.
However, in November 2008, Eesti Energia joined the
reactor development program called IRIS, led by
Westinghouse Electric Company. Eesti Energia did this
to signal to Westinghouse that there is a potential
interest in IRIS reactors for Estonia.

-- What nuclear sector opportunities do you foresee
for U.S. industry (e.g., feasibility studies or other
consulting services, plant construction management,
reactor sales, fuel cycle service provision, plant
operations, waste management, or logistics)?


TALLINN 00000431 003 OF 003


Feasibility studies or other consulting services
related to the building and operation of a nuclear
power plant, reactor sales, and waste management are
areas of opportunity for U.S. industry. In January
2009, officials from the Estonian Ministry of
Environment will meet with the U.S. Department of
Energy to discuss nuclear waste management safety.

-- If applicable, what are the primary companies
(domestic and foreign) involved in (or considering
involvement in) your country's civil nuclear sector?
Please include utilities, plant operators, fuel cycle
service providers, technology vendors, and major
construction or consulting firms.

Estonia does not have a civil nuclear sector. Eesti
Energia (the state-owned energy company) has currently
the best outlook for developing this capacity.

Foreign Competitors
-------------------

-- Are there other nuclear supplier countries engaging
your country? Please describe any available details
on formal agreements including existing or potential
(1) MOUs on nuclear cooperation; (2) legal frameworks
for nuclear commerce; or (3) arrangements for
technical or information exchanges.

The Prime Ministers of Estonia, Latvia and Lithuania
agreed in 2006 (the Trakai Communique) to partner on
building a new Power Plant to replace the Ignalina
plant at Visaginas, Lithuania. The plant was supposed
to be in operation by 2015, but little progress has
been made in implementing the project. Lithuania
later invited Poland to join the project.

-- Are there any political considerations your country
may take into account when choosing to cooperate with
competing nuclear supplier states?

Estonian energy plans are driven by the goals of
ensuring a diverse energy supply in the long term.
For legal, regulatory and political reasons, the GOE
prioritizes cooperate with other European Union member
states.

DECKER

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