Background

Energy is treated by Russia as an area of confrontation with EU countries. Russian-controlled energy companies are used instrumentally to achieve political goals.

Russia, rich in fossil-fuel resources and with a developed energy industry, is pursuing a policy of carrot and stick with energy. The carrot is preferential contracts with countries friendly to Russia in order to further make them dependent on Russian raw materials and deepen energy-political relations. This is the case with Hungary, which, despite the Russian invasion of Ukraine, is deepening energy cooperation with Russia.

On the other hand is the stick—energy blackmail against countries that are perceived as assertive towards Russia. It has put pressure on Poland and other EU countries repeatedly, including in the fall of 2021. At that time, Russia artificially reduced gas exports to try to gain political concessions from EU countries in negotiations on the status of Ukraine.

This stick and carrot policy is applied to energy matters through state-owned corporations—Gazprom (gas), Rosneft (oil), and Rosatom (nuclear technologies). The Russian nuclear company provides comprehensive, competitively priced services, but through monopolistic practices analogous to Gazprom’s methods.

Cooperation with Rosatom can be considered a threat to the energy security of EU countries. Too much dependence on Russia at any stage of the nuclear fuel chain can be used by Moscow to exert political pressure. Continuing trade relations with the company also indirectly enhances Russia’s military potential. This is because Rosatom operates not only in the civilian area but also in the military realm. It is responsible for maintaining Russia’s nuclear weapons capability[1] and by supplying components for the production of conventional weapons used in the targeting of Ukrainian civilian infrastructure[2]. It is also involved in the occupation of the Zaporizhzhia Nuclear Power Plant.

Although Rosatom’s active support for the Russian war in Ukraine qualifies the company for sanctions, the EU has not decided to impose an embargo on it. The reason for this is the resistance of countries benefiting and heavily dependent on the cooperation with the Russian company, but there are also technological obstacles. In 2022, the value of EU imports of nuclear industry products from Russia amounted to about EUR 720 million, an increase of about 22% over the previous year.

Rosatom—a political corporation

Rosatom is a state-owned group of more than 300 entities working throughout the entire production chain of the civilian and military nuclear industry, from the supply of uranium and nuclear fuel to the operation of nuclear-powered icebreakers and the maintenance of the country’s nuclear weapons arsenal[3].

Rosatom was created as a result of the transformation of the Federal Agency on Atomic Energy (previously a ministry in the communist government of the USSR and then the Russian Federation) and remains under the strict control of the Russian president, who appoints the corporation’s director.

In the area of uranium enrichment alone, Rosatom controls about 45% of the world’s production capacity. Due to the range and complexity of its services, Rosatom is referred to as a one-stop nuclear shop[4].

Rosatom is working closely with the Russian state development bank, VEB.RF. This renders the offer made by Russia to states interested in building nuclear power plants very financially attractive. The recipient state’s contribution only comes down to a political decision on nuclear cooperation with Russia. Rosatom offers to build, train personnel, service, supply fuel, store spent fuel, and decommission the plant along with financing 100% of the costs via a low-interest loan.

However, the contract may be accompanied by additional clauses, political conditions, or monopolistic practices. The classified nuclear power plant agreement with South Africa included a prohibition on the state’s cooperation with a nuclear technology supplier other than Rosatom[5]. In Turkey, on the other hand, where Rosatom is building the Akkuyu power plant under the Build-Own-Operate (BOO) model, the corporation, in violation of local law, excluded a Turkish subcontractor to take full control of the plant’s construction and operation[6].

The Russian government is deliberately taking advantage of Western countries’ dependence on Rosatom to employ political blackmail against them. An example is the United States, which in the 1980s and ‘90s significantly reduced its uranium enrichment capacity, replacing it with imported semi-product from Russia derived from the decommissioned Soviet nuclear arsenal. As a result, the U.S. became dependent on supplies of enriched uranium from Russia and Kazakhstan. In March 2022, Russian Deputy Prime Minister Aleksandr Novak threatened to halt uranium supplies to the U.S. in response to Western sanctions over Russia’s invasion of Ukraine. Uranium and fuel imported into the EU are also likely to be subject to similar Russian blackmail. There are currently 20 nuclear units of the Russian VVER design operating in the EU. They are located in Bulgaria (2), Czechia (6), Finland (2), Hungary (4), and Slovakia (6). Although fuel deliveries are made in batches, every few years, it is possible for Russia to intentionally withhold scheduled deliveries (a known practice in the case of natural gas). Suspension of the supply of ore and enriched uranium on which the EU depends could disrupt the production of nuclear fuel in the European Union and lead to an increase in the price of the raw material, exacerbating the energy crisis.

EU-Russian fuel cycle

Nuclear power is often portrayed as a way for European countries to become independent of fossil fuel imports, for which the EU does not have the capacity to meet its own needs. However, it should be emphasised that also in the case of the nuclear fuel cycle, the EU is dependent on imports at every stage of the cycle.

Throughout the nuclear fuel cycle, EU countries show the greatest degree of dependence on imports of ore and enriched uranium. Using some simplification, these stages can be compared to the production of oil (uranium ore) and the ability to refine it (enriched uranium).

Uranium ore

Although there are confirmed deposits of uranium in the EU, it is not mined due to the low profitability of the process compared to imports. Most of the explored and mineable deposits are classified among the most expensive to exploit, according to the International Atomic Energy Agency Methodology. Costs are estimated at USD 130-260/kg of ore. Therefore, in the EU, uranium is extracted only in negligible quantities in Czechia as a byproduct of other mining processes[7].

Almost all of the uranium ore used in the EU is imported, mainly from Niger, Kazakhstan, Russia, and Australia. Although the share of uranium ore from Russia is not dominant, accounting for about 20%, Russia also partially controls supplies from Kazakhstan. In addition, the seizure of power by the pro-Russian junta in Niger has increased uncertainty about the continuity of supplies from that country[8].

However, obtaining uranium from alternative sources to Russia is possible. Among ore producers, countries such as Namibia, Canada, and Uzbekistan have great potential. Increased mining in Ukraine is also possible. It currently mines only 400-800 tonnes of uranium per year at plants in the centre of the country. This is an amount equivalent to about 15-30% of domestic demand. An increase in mining, announced by the Ukrainian authorities as part of the country’s reconstruction plan, would require investment involving foreign companies.

Any increase in the price of uranium sourced by EU countries would have a negligible impact on the cost of electricity generation. It is estimated that a 50% increase in the price of uranium translates into about a 5% increase in the price of electricity[9].

Uranium enrichment

About half of the enriched uranium used in the EU is imported, mainly from Russia (24%). Along with obtaining ore, this is the weakest point in the EU’s nuclear fuel production chain, and decoupling from Rosatom’s services in this regard would be the biggest challenge.

Until 2021, Sweden, which is home to the U.S. Westinghouse nuclear fuel plant (using enriched uranium), was the largest buyer of Russian enriched uranium in the EU. In 2022, the value of enriched uranium imports from Russia to Sweden dropped to zero.

Nuclear fuel

The nuclear fuel production market is relatively competitive, with plants located in more than a dozen countries. In the EU, nuclear fuel is produced in France, Germany, Spain, Sweden, and the UK. Until the late 1990s, the fuel supply of Soviet-designed nuclear units (VVER) was a challenge. Due to the characteristics of the fuel assemblies, the only supplier for them could be the Russian company TVEL (a Rosatom subsidiary). Currently, fuel for Soviet-design nuclear units is also produced by the U.S. Westinghouse, and the French Framatome is planning to start production (supplies to Czechia). The plants of both companies are located in the EU. This means that moving away from Russian supplies at this stage is technically possible.

Reprocessing—the French-Russian duo

The largest importer of Russian nuclear industry products in Europe is France. Cooperation between the two countries is very close. Until the Russian invasion of Ukraine, France spent an average of EUR 120 million a year on Russian nuclear industry products. However, as of March 2022, this spending has risen to as much as EUR 440 million, accounting for more than half of all EU imports.

This is despite the fact that France, with its own extensive nuclear industry, never intended to build Russian-designed nuclear units on its territory.

Franco-Russian cooperation is mainly based on the reuse of spent fuel in French nuclear units. After purification in France, the uranium is sent to Russia for conversion and enrichment, resulting in a product that is cost-competitive with enriched uranium from ore. This is a process without which French power plants can nevertheless operate. After protests by Greenpeace, the procedure was halted in 2010[10], but resumed in 2021.

French-Russian ties in the nuclear sector, however, run much deeper. Rosatom’s foreign nuclear projects are built in part with French components (such as management and control systems)[11]. In December 2021, Framatome and Rosatom signed a long-term cooperation agreement covering management systems and fuel production[12]. In turn, the French EDF intends to work with Rosatom on hydrogen investments in Russia and the EU[13]. This fits in with Russia’s strategy of building further (non-fossil fuel related) areas of EU dependence on Russia.

Building EU nuclear resilience

Until the Russian full-scale invasion of Ukraine (Feb. 24, 2022), only a handful of countries considered dependence on Russia in the nuclear industry as a threat to energy security and took steps to, for example, abandon Russian fuel. Ukraine began working with Westinghouse as early as 2005, resulting in the replacement of Russian TVEL fuel in 7 of its 15 nuclear units. Czechia signed a contract with Westinghouse to supply fuel for VVER units in 2016, two years after Russia’s “first” invasion of Ukraine.

After February 24, 2022, more EU countries considered cooperation with Russia in the nuclear sector as a threat and intensified efforts to reduce ties with Rosatom. As early as February 2022, the Finnish government announced that it would not approve the construction of the Russian Hanhikivi 1 nuclear unit, as a result of which the Finnish company Fennovoima cancelled its contract with Rosatom[14]. In turn, Sweden on February 25, 2022, suspended imports of nuclear fuel from Russia[15].

In November 2022, the Bulgarian parliament instructed the government to provide non-Russian fuel for the Kozloduy nuclear power plant[16]. A month later, Bulgaria concluded contracts with Westinghouse and Framatome to supply fuel for VVER units[17]. In the same year, the Czech CEZ concluded further contracts with the two companies (supplies for the VVER-1000 and VVER-400 plants)[18].

Coordinated EU and Ukrainian efforts to become independent of the Russian nuclear industry began in January 2023, when the APIS project was launched. It aims to replace Russian fuel in VVER-1000 (4 in the EU) and VVER-440 (16 in the EU) units with Western equivalents[19]. The project includes a consortium of companies and organisations from 13 countries, with Westinghouse as coordinator.

Conclusions

Nuclear power is a non-competitive sector, divided among several global corporations. This fosters deep dependencies between the countries where the power plants are located and technology suppliers. Especially in a situation where a single technology has been decided upon. The Russian government is in control of Rosatom and fosters its foreign expansion by offering, among other things, very attractive state financing. At the same time, the Kremlin uses Rosatom to advance its own political and military goals. It uses a carrot-and-stick policy in energy, offering cheap energy to friendly countries and threatening to withhold supplies to assertive ones. In addition, the corporation is cooperating with Russia’s defence industry and army, including in the occupation of the Zaporizhzhia Nuclear Power Plant.

It is a risky policy for European Union countries to maintain relations with Rosatom. High dependence on this company at every stage of the nuclear fuel cycle allows Russia to use energy blackmail, as in the case of threatening the United States with cutting off supplies of enriched uranium.

Making good on such threats would not result in immediate serious consequences for the EU energy industry. Nuclear power plants store fuel for a few years or more, so cutting off supplies is incomparably less damaging than in the case of, for example, gas or oil, whose supplies last for a few dozen days. It would be possible to supply fuel from another power plant, or to be supplied by the Westinghouse plant in Sweden, which produces fuel to use in Russian-designed nuclear units.

However, the interruption of supplies from Russia would be dangerous for the development and operation of nuclear power in the EU in a few years’ time. At present, EU countries are unable to completely break their dependence on Russia at several stages of the fuel cycle, especially in uranium enrichment. Therefore, it is advisable to increase the capabilities of EU countries in areas where they are most vulnerable to external blackmail or supply shocks.

For the success of such a policy, it is essential to secure investments so they are economically justified. Rosatom will try to prevent this by offering even cheaper services and products. For this reason, EU support for the uranium enrichment industry at the EU level is crucial.

Poland should support all EU efforts to reduce the ties of EU countries with Rosatom. At the same time, as a country aiming to build nuclear power plants on its territory, it should support the EU’s efforts to develop its own potential, especially in the area of uranium enrichment. When deciding on an investor for further projects, it also makes sense to diversify its partners in order to reduce dependence on a single supplier of technology and know-how and diversify its own capabilities.  

Ukraine can play an important role in obtaining uranium ore. In the long term, it can supply uranium for further processing in EU countries. After joining the Union, Ukraine will be a major intra-EU source of ore. Therefore, it is in the EU’s interest to support research and development of mining potential in the country.

Annex: Russian Power in the EU

Bulgaria

Bulgaria has two VVER 1000 units, each with a capacity of 1 GWe, which supply about a third of the country’s electricity needs. They are fuelled with Russian TVEL fuel (through the TENEX company). However, exact data on the value of imports of Russian fuel and equipment for the nuclear units are not available. The Bulgarian Statistical Office does not publish them and does not report them to Eurostat. However, the value of deliveries can be estimated based on data from the Russian Customs Service. In 2020, they amounted to about EUR 120 million, and a year later to EUR 60 million. Data for 2022 have not been made public.  

Czechia

Czechia operates four VVER 440 (Dukovany) and two VVER 1000 (Temelin) units with a total capacity of 4.2 GWe. They supply about one-third of Czechia’s electricity needs. 

Fuel for the VVER 440 units is supplied by the Russian company TVEL. In turn, fuel for the VVER 1000 units will be supplied by Westinghouse and Framatome from 2024 for 15 years. Czechia spends annually about EUR 120 million on imports of nuclear industry products (see Methodological Notes) from Russia. Since the Russian invasion of Ukraine, they have dropped only slightly to EUR 98 million (3.2022-3.2023).

Finland

Of the EU countries with Russian-designed nuclear units, Finland is the least dependent on imports of Russian nuclear industry products. It has two (out of a total of five) VVER 440 units at the Loviisa power plant, with a total capacity of 1GWe. They supply about 11% of Finland’s electricity needs. Finland purchases fuel for them from TVEL in Russia. Since the Russian invasion of Ukraine it has spent on this purpose about EUR 33 million. However, it should be noted that the uranium used to produce fuel for non-Russian nuclear units operating in Finland is also enriched in Russia.

Hungary

Almost half of the electricity consumed in Hungary comes from four WWER 440 units at Paks, with a total capacity of 1.9 GWe. In addition, Hungary has selected Rosatom as the contractor for two more VVER 1200 units, to be 80% financed by Russia (a EUR 10 billion loan). Hungary’s Nuclear Regulatory Authority OAH issued a license for the construction of the units in August 2022[20].

The nuclear fuel used in Hungary comes entirely from the Russian company TVEL. Hungary spends an average of EUR 70 million a year on this purpose and on the purchase of other nuclear industry products from Russia. Since the invasion of Ukraine, this spending has increased significantly to EUR 130 million (3.2022-3.2023).

Slovakia

Slovakia is the most dependent on electricity produced in units of Russian design. As much as 60% of the electricity used in the country comes from them. It is generated by five VVER 440 units with a total capacity of 2.3 GWe. The last of these was connected to the grid in 2023 (Mochovce 3)[21]. The commissioning of another VVER 440 unit Mochovce 4 is planned for 2024. At that time, the share of Russian nuclear units in the mix will be up to 75%.

Fuel for Slovak nuclear units is supplied 100% by Russia’s TVEL. This led to the need in March 2022 to exempt from the sanctions Russian airliners carrying nuclear fuel to Slovak power plants[22]. Slovakia spends an average of EUR 70 million a year buying nuclear products from Russia. Since the Russian invasion, this spending has risen to EUR 117 million (3.2022-3.2023).

Methodological notes

The data used for this analysis are from open sources. For EU trade with Russia, EUROSTAT data were used. In the case of Bulgaria, the data is not provided by the national statistical office and is not publicly available, so Bulgaria was omitted from the EU aggregate analysis[23]. Only the section on electricity production and imports of products of the Russian nuclear industry mentions the estimated cost of imports from Russia, obtained from the Russian customs office. Given the lack of verifiability of this data in EU sources, it should be treated only as indicative.

The phrase “nuclear industry products” used in the analysis refers to all SITC trade categories reported by Eurostat, namely:

- 52511 - Natural uranium & its compounds; alloys, dispersions (including cermets), ceramic products & mixtures containing natural uranium/natural uranium compounds;

- 52513 - Uranium enriched in U 235 & its compounds; plutonium & its compounds; alloys, dispersions (including cermets), ceramic products & mixtures containing uranium enriched in U 235, plutonium/compounds of these products;

- 52517 - Spent (irradiated) fuel elements (cartridges) of nuclear reactors;

- 7187 - Nuclear reactors and parts thereof; fuel elements (cartridges), non-irradiated, for nuclear reactors.

[1] Rosatom 2020 Annual Report, Performance of the Nuclear Weapons Division, https://www.rosatom.ru/upload/iblock/d83/d832075be25854001173de592f99953d.pdf, p. 72.

[2] Catherine Belton, Russia’s state nuclear company aids war effort, leading to calls for sanctions, The Washington Post, 20.01.2023, https://www.washingtonpost.com/world/2023/01/20/rosatom-ukraine-war-effort-sanctions/

[3] Rosatom 2020 Annual Report, https://www.rosatom.ru/upload/iblock/d83/d832075be25854001173de592f99953d.pdf, s. 16.

[4] Patricia Cohen, Why Russia Has Such a Strong Grip on Europe’s Nuclear Power, New York Times, 10.03.2023, https://www.nytimes.com/2023/03/10/business/economy/russia-nuclear-energy-ukraine.html

[5] Qaanitah Hunter, Lionel Faull, Jacob Zuma’s secret nuke ‘stitch-up’, Mail&Guardian, 25.08.2014, https://mg.co.za/article/2014-09-25-jzs-secrete-nuke-stich-up/

[6] Nuclear Engineering International, Turkish Energy Ministry mediates in dispute over dismissal of Akkuyu NPP construction company, 4.08.2022, https://www.neimagazine.com/news/newsturkish-energy-ministry-mediates-in-dispute-over-dismissal-of-akkuyu-npp-construction-company-9902249

[7] Loyd M. Trimmer III, The Mineral Industry of Czechia, [w:] 2019 Minerals Yearbook, U.S. Department of the Interior, U.S. Geological Survey, 02.2023, https://pubs.usgs.gov/myb/vol3/2019/myb3-2019-czechia.pdf

[8] Elias Ferrer Breda, Forbes, 29.08.2023, https://www.forbes.com/sites/eliasferrerbreda/2023/08/29/will-niger-troubles-squeeze-uranium-supply/?sh=22c1c9972d48.

[9] World Nuclear Association, Economics of Nuclear Power, 08.2022, https://world-nuclear.org/information-library/economic-aspects/economics-of-nuclear-power.aspx

[10] Sophie Caillat, Chut ! Areva cesse d'exporter ses déchets radioactifs en Russie, L’Obs, 10.11.2016, https://www.nouvelobs.com/rue89/rue89-planete/20100528.RUE6775/chut-areva-cesse-d-exporter-ses-dechets-radioactifs-en-russie.html

[11] Victor Jack, French-Russian nuclear relations turn radioactive, Politico, 20.04.2023, https://www.politico.eu/article/french-russian-nuclear-relations-radioactive-rosatom-sanctions/

[12] Framatome, Framatome and Rosatom sign long-term cooperation agreement, 2.12.2021, https://www.framatome.com/medias/framatome-and-rosatom-sign-long-term-cooperation-agreement/#:~:text=December%202%2C%202021%20%E2%80%93%20Framatome%20and,and%20control%20(I%26C)%20technologies.

[13] Rosatom, ROSATOM and EDF Group join forces to develop green hydrogen strategy, 26.04.2021, https://rosatom.ru/en/press-centre/news/rosatom-and-edf-group-join-forces-to-develop-green-hydrogen/

[14] Yle, Fennovoima pulls the plug on Russian-built nuclear plant, 2.05.2022, https://yle.fi/a/3-12425648

[15] Adnan Munawar, S&P Global, Vattenfall ends nuclear fuel deliveries from Russia, citing Ukraine conflict, 25.02.2022, https://www.spglobal.com/marketintelligence/en/news-insights/blog/insight-weekly-july-25-2023

[16] Krassen Nikolov, Bulgarian government must urgently find non-Russian nuclear fuel, Euractiv, 10.11.2022, https://www.euractiv.com/section/politics/news/bulgarian-government-must-urgently-find-non-russian-nuclear-fuel/

[17] World Nuclear News, Kozloduy and Framatome sign nuclear fuel agreement, 04.01.2023, https://world-nuclear-news.org/Articles/Kozloduy-and-Framatome-sign-nuclear-fuel-agreement

[18] CEZ Group, Americans and French will supply nuclear fuel to Temelín, 12.04.2022, https://www.cez.cz/en/media/press-releases/americans-and-french-will-supply-nuclear-fuel-to-temelin-157447

[19] Accelerated Program for Implementation of secure WWER fuel Supply, https://apis-project.eu/

[20] Hungarian Atomic Energy Authority, The HAEA issued the construction license to Paks II. Ltd., 26.08.2022, http://www.oah.hu/web/v3/HAEAportal.nsf/web?OpenAgent&article=news&uid=273E525123362584C12588AA002F9FE1

[21] World Nuclear News, Mochovce 3 supplies first electricity to grid, 1.02.2023, https://www.world-nuclear-news.org/Articles/Mochovce-3-supplies-first-electricity-to-grid

[22] Michal Hudec, Russian plane with nuclear fuel landed in Slovakia, Euractiv, 2.03.2022, https://www.euractiv.com/section/politics/short_news/russian-plane-with-nuclear-fuel-landed-in-slovakia/

[23] In response to our inquiry to Eurostat, we received a notice stating "In some situations, data is confidential." The Bulgarian statistics bureau and EURATOM ignored our inquiry.