The UAE is days away from awarding the largest ever energy contract in the Middle East for the development of a nuclear power plant, industry sources said on Tuesday.

The contract to build at least four reactors is expected to cost the world's third-largest oil producer as much as $40 billion, consultancy Eurasia Group said in a research note published in August.

The consortia from France, which includes nuclear group Areva , GdF Suez, and Total, is in pole position to win the contract, sources familiar with the negotiations said.

'We think we are still well positioned to win it, we have the nuclear expertise,' a source from the French group said.

'The winner will take it all, the bid was for two reactors originally but then they (UAE) wanted four and maybe six, whoever wins gets the whole package.'

The other bidders include a consortium comprised of General Electric and Japan's Hitachi, and another of Korea Electric Power Corporation, Hyundai Engineering and Construction and Samsung C&T Corporation. 
'Emirati leaders have historically valued France's nuclear experience,' the Eurasia Group said. 'And a major deal with the French government would fit within the UAE's diversification plans in terms of both energy and security.'

President Nicolas Sarkozy was in the UAE in May to open a military base, and some analysts saw the visit as enhancing the French consortium's prospects of winning the contract.

'Sarkozy's visit was clearly to promote the French bid and this is a natural process that France always goes through when it comes to commercial deals,' said Christian Koch, director of international relations at the Gulf Research Center.

'France is already a major partner to UAE in the defence area and I wouldn't be surprised if they are leading in the bid now.'

Power demand

Record oil revenues have driven an economic boom that has strained domestic power grids in the UAE, and to keep the export cash coming in, Abu Dhabi is looking to nuclear energy to help cap fuel burned for power at home, analysts said.

'Right now the country only burns fossil fuels, bringing in nuclear energy will help it to free that (gas) up for industrial or for international exports,' said Raja Kiwan of PFC Energy.

'This is part of the leadership's plans to develop a more well diversified and long-term strategy for energy use throughout the country.'

The UAE anticipates its electricity requirements to rise from 15.5 gigawatts (GW) in 2008 to 40 GW in 2020, the Eurasia Group said.

The proposed nuclear plant will likely provide about 3 percent of the power supply to the market in the UAE by 2020 with the start-up of about 1 GW of nuclear power, and by 2025 nuclear power will supply about 15 percent to the market, consultancy Wood Mackenzie said. – Reuters