Finnish nuclear plant delayed again as Areva, TVO bicker

Monday, March 3, 2014

HELSINKI/PARIS, Feb 28 (Reuters) - Finland's TVO was unable on Friday to estimate a start date for its long-delayed Olkiluoto 3 nuclear reactor as the utility and French supplier Areva, already battling in court, blamed each other for the latest delays.

Finnish daily Kauppalehti cited sources from the site saying the startup of the reactor could be delayed until at least 2018 as work had slowed.

Early last year, Teollisuuden Voima (TVO) said the start might be delayed until 2016. Construction of the Areva-designed EPR reactor began in 2005 and was originally scheduled for completion in 2009.

Site manager Jouni Silvennoinen said TVO was still waiting for supplier Areva-Siemens to update its work schedule following a reduction of 400 workers at the site this year. TVO said the site currently has about 1,000 workers.

Areva Finland has said it cut staff to focus its efforts on the most critical tasks, but TVO said more could be done.

"We think some other work could be done at the same time," Silvennoinen said.

At Areva's earnings presentation on Wednesday, Chief Executive Luc Oursel gave no completion date but said work was 86 percent done.

Areva also took a new 425 million euro ($587 million) provision on Olkiluoto, taking total provisions on the project to 3.85 billion euros and knocking Areva into a 494 million euro loss for 2013.


Oursel told Reuters on the sidelines of the presentation that Olkiluoto 3 was going into the test phase and that TVO needed to be closely involved at this stage.

"At a certain point, the client needs to take control, but we cannot get precise engagements," Oursel said, adding that Areva had been working with TVO for a year just to try and draw up a common calendar.

He blamed the delays on "excessive influence of lawyers".

"TVO is a client which is no doubt a bit too much influenced by its lawyers about how to handle this project. It is holding to an extremely strict contractual framework," he said.

The International Chamber of Commerce's arbitration court is processing a dispute on cost overruns, and Areva-Siemens in October raised its compensation claim against TVO to 2.7 billion euros.

TVO, owned by Finnish firms including Fortum, UPM-Kymmene and Stora Enso, has submitted a counter claim of 1.8 billion euros.

"It is one of the biggest conflicts in the history of the construction sector," Areva Chief Operating Officer Philippe Knoche told reporters on Wednesday.

He added the Olkiluoto problems were due to the relationship with the client, the Finnish regulatory framework and the lack of maturity of the supply chain. He also said Areva's claim against TVO did not cover its losses on the project.

Olkiluoto 3's construction costs were first estimated at 3.2 billion euros. Late in 2012, Oursel estimated the overall cost would end up closer to 8.5 billion euros.


Asked about the risk to Areva's reputation of a conflict with a client, Oursel said the two EPRs being built in Taishan, China were on budget and on schedule and that Britain's choice of two EPR reactors at Hinkley Point proved the problem was not with its reactor design.

"The EPR is seen as a good technology, and the problems we experience are more and more specifically Finnish," he said.

A fourth EPR being built in France, now 57 percent complete, has also been haunted by multi-year delays and billion-euro cost overruns, however.

Olkiluoto 3 was the first project for which Areva took charge as project manager, not just supplying the reactor.

The Finnish project was an attempt by previous Areva CEO Anne Lauvergeon to get out from under the wing of French state-controlled utility EDF, which has traditionally acted as a project manager in French nuclear plant construction.

During the earnings presentation, Areva's new management took pains to distance itself from "the weight of projects launched in the 2000s decade".

The Observatoire du Nucleaire, a French anti-nuclear group, blasted Areva for the new Finnish delays.

"This is a complete Waterloo for Areva," the group said in an emailed statement.

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