THE French nuclear power industry is banking on high oil prices and global warming concerns to help an export drive for its third- generation reactors, as the world seeks new energy sources to maintain living standards.

Although oil prices had slipped to three-month lows late last week, Brent was still trading at about $48 (Pounds 26, E38) a barrel, a level that has alarmed economists worried that high energy prices will stunt world growth and spur inflationary forces.

And with countries under pressure to curb the emission of greenhouse gases under the Kyoto treaty, French nuclear engineers and sales executives are writing bullish scripts for the sector.

French President Jacques Chirac has made sustainable development one of his themes, and uses it to advocate nuclear power which, although highly toxic, does not throw off carbon dioxide, the gas blamed for destroying the ozone layer.

France embarked on an aggressive programme of self-reliance through atomic energy in the wake of the 1973 oil crisis, when Opec switched off the taps in retaliation for the West's support for Israel.

That state support for the sector has meant France has a commanding position in the world nuclear market, worth about E20bn in sales a year, based on the 440 reactors worldwide.

Areva, the state-owned nuclear power company, had 2004 turnover of E11bn, generated through services to the world industry, including engineering support, transport, recycling and stocking of waste material, as well as maintenance of reactors and plants.

The company is headed by one of France's rare women chief executives, Anne Lauvergeon, and is slated for privatisation. Areva sees a renewed interest in building new nuclear power stations in Europe, the United States, and developing regional giants such as Brazil and China, as planners consider the insatiable appetite for energy and the creeping obsolescence of the current atomic generators.

An Areva executive said the company is watching the UK, as the government considers its energy options. Of the 12 reactors in service, several are to be decommissioned from 2008 and there are fears of an electricity supply shortage and increased dependency on gas imports.

In the UK, the Nuclear Industry Association is lobbying for construction of 10 power stations, arguing that a large programme would deliver economies of scale and allow Britain to meet its commitments on climate change.

Alternative power sources including wind farms, solar power and crop-burning systems are expected to fall short of a forecast 10% of production by 2010, and Britain looks likely to miss a target of a 20% cut in carbon dioxide emissions in the same period.

China, the world's second-largest energy consumer, represents a vast market in the short and long term. Areva signed two contracts on 18 May worth about E400m for two second-generation systems for the Ling Ao nuclear power plant in Guangdong province.

The company is also competing against BNFL-Westinghouse and the Russian AtomStroyExport in an international tender to build four third-generation reactors estimated to be worth E8bn. Areva claims it is the only company to have sold a third-generation system, to France and Finland, although Westinghouse has designed a competitor product on paper.

Each reactor would generate output of 1,000 megawatts (MW) and whoever wins the contract is expected to snare the main prize, a programme to build 20 similar reactors by 2020. By 2020, China wants atomic power to contribute 4% of its total energy needs, or 36,000 MW, from 1.6% two years ago. Coal provides 68% of current energy supplies.

In Europe and the US, 2010 is shaping up to be a pivotal period, as governments and operators face crucial decisions on the present second-generation reactors. The Bush administration wants to overcome resistance to nuclear power and is campaigning for a programme to build one or two power stations from 2010. If successful, the plants would be the first to be built since the 1979 accident at Three Mile Island.

Security of supply has emerged as an issue in Washington, given the instability in the regions where oil and gas reserves are located. Discoveries of large new reserves are receding.

Areva is preparing certification of its European Power Reactor (EPR), a third-generation system developed with Siemens, for the US market. The US has 103 nuclear reactors, with Westinghouse and General Electric as the domestic operators. Nuclear makes up 8% of US energy consumption, compared with 78% in France. Finland and France are the first countries to order the EPR reactors, with Helsinki taking one and France two. Finland is concerned about relying on Russian gas imports. Elsewhere around Europe, Sweden and Turkey are reviewing the nuclear option as is Italy.

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