Korea has called on the USA to co-operate in resolving the legal dispute between Korea's Korea Hydro & Nuclear Power (KHNP) and Westinghouse over Korea’s planned reactor exports to the Czech Republic and other nations. Industry Ministry Lee Chang-yang made the request during a meeting with his US Energy Secretary Jennifer Granholm in Washington on the sidelines of President Yoon Suk Yeol's state visit, according to Korea’s Ministry of Trade, Industry & Energy.
In October 2022, Westinghouse Electric Company filed a lawsuit against KHNP after Polska Grupa Energetyczna (PGE) and listed Polish private power plant operator ZE PAK announced plans to sign a letter of intent with KHNP on building an APR1400 reactor at a former coal plant. This followed a tender to supply reactors for Poland’s nuclear power programme, which had been awarded to Westinghouse, despite press reports that KHNP’s offer had been expected to win. The Westinghouse lawsuit alleges intellectual property infringement by KHNP insisting that US government consent is needed before KHNP can export an APR1400 nuclear reactor as it is created based on Westinghouse technology.
KHNP contests this. “After launching its own nuclear programme, Korea gradually built up technology, carrying out research and development projects with long-term plans for over 30 years. Thanks to this process, it gained competence in the design, production and construction of nuclear power plants in order to finally develop her own, independent technology,” the company said.
During the meeting with Granholm, Lee said: "The South Korean and the US governments need to make joint efforts to swiftly resolve the legal dispute between the nuclear energy companies of the two nations, as the global dependence on nuclear energy has risen recently in the face of an energy supply crisis."
Earlier this year, the US Department of Energy (DOE) rejected a filing by KHNP regarding its bid for a nuclear reactor construction project in the Czech Republic, according to officials. In a response to the KHNP's letter, DOE said that any such letters "must be submitted by US persons" under its regulations, indicating that its cooperation with Westinghouse is essential, raising concerns about Korea’s export plans.
The joint statement, issued after the summit between Yoon and US President Joe Biden, said that the two nations mutually respect "each other's export control regulations and intellectual property rights" regarding nuclear energy issues.
Despite this underlying issue, it was agreed to boost cooperation in the nuclear energy sector, including the manufacturing, operation and management of small modular reactors (SMRs) and their export, as well as a more resilient nuclear supply chain, the Ministry said. The two sides also agreed to launch the Energy Policy Dialogue to boost cooperation on the development of hydrogen, renewable and other clean energy, and to jointly cooperate on energy security to achieve their net-zero goals.
Lee stressed the need for stronger ties regarding supply chains of key minerals by maximising the US-led Mineral Security Partnership, and asked for Washington's attention to South Korean energy companies operating in the US as they seek tax incentives under the Inflation Reduction Act, the Ministry added.
Lee’s request to Granholm came after a press conference held in Poland by Westinghouse CEO Patrick Fragman following talks with US Ambassador to Poland Marek Brzezinski and Minister of Development Waldemar Buda. Fragman was accompanied by the Westinghouse President in Poland Miroslaw Kowalik.
In reply to a question from Polish journalists Jacek Perzynski from Biznesalert about Korea’s planned nuclear projects in Poland, Fragman replied that the Korean project was “virtual”. He added: “We do not believe that it is a credible project. It violates US export laws and international regulations. In our opinion, this project will never be realised. We have the same stance on Korean initiatives in other countries…. The potential for Poland exists, but you have to wait for it. In the short term, if you want a proven technology that is already in use and provides attractive energy costs, the AP1000 is an obvious choice."
Daniel Czyzewski from Energetika 24 then asked: "Please clarify, the KHNP nuclear power plant in Poland will never be built?.... I wanted to be more precise, because this is a strong position." Fragman responded: "I cannot imagine that a country like Poland, which applies the rule of law, would allow technology that violates intellectual property rights." Czyzewski persisted: "You don't see any possibility of an agreement with the Koreans?" Fragman replied: "I just told you we're in the middle of a lawsuit, which doesn't leave much room for negotiation. Litigation means that we have reached the point where negotiations have not yielded anything, the methods of reaching an agreement have been exhausted. A lawsuit is a last resort."
According to Czyzewski Westinghouse officials then “tried to push an ‘authorised’ version of the statement, which was milder than what was actually said.” However, the entire exchange was recorded and the recording was later published on Twitter by Energetica 24.
In a long follow-up article, Czyzewski speculated about the reasons for Fragman’s statement, noting that Fragman “knew perfectly well” that the meeting was being recorded. He suggested if reflected a struggle behind the scenes noting “there are billions of dollars in the game”.
He said: “We do not know what the judgments of the courts in the United States and Korea will be, but there are other forms of pressure. It is no secret that the Polish government chose WEC [Westinghouse] mainly for political reasons, so it cannot be ruled out that the company will try to sink the Korean project through these channels as well.” He also noted that it is “likely” that the Koreans will make some components for the /Westinghouse NPP as “Westinghouse is a relatively small company that will not be able to carry out the investment from A to Z”…. It is possible that Fragman simply wants to strengthen his negotiating position” so that Korea will lower the price for its services.
Czyzewski said “sources” had told Energetika 24 that Fragman's statement may also be a form of pressure on the Polish government.
Recalling Fragman’s charge that the Koreas are breaking US law, he noted that it does not apply in Poland, “so it has no legislative significance for Warsaw” but “American political pressure may still matter”.
However, the talks underway in Washington could resolve the situation, he suggested. “For Korea, the nuclear programme is crucial and relations with the US are very good. South Korean President Yook Sun Yeol is currently in the United States, where he was warmly welcomed by Joe Biden. It is likely that the leaders will coordinate nuclear dissension between the companies” given wider geopolitical considerations. “Washington agreed to the periodic deployment of US nuclear-armed submarines in South Korea and the inclusion of Seoul in nuclear planning operations. In return, South Korea pledged not to develop its own nuclear weapons.”
He concluded: “It seems, therefore, that Patrick Fragman's ploy is part of the negotiations. With whom and about what? We do not know this for sure, but it may well be addressed to both KHNP and the Polish government. Ultimately, who doesn't like to kill two birds with one stone.”
The Polish government has, from the start made clear its support for both the official nuclear programme based on Westinghouse technology and the Korean project supported by private companies Poland’s PGE, ZE PAK (both of which are owned by the Treasury). Fragman said that having two nuclear technologies in Poland "makes no sense". He added: “If you ask any person with any knowledge of industrial processes, there is no point in having two separate technologies for these two locations. In the context of synergy, supply chain, capacity engagement, staff training, it only makes sense to choose one technology."
Energetika 24 said PGE, ZE PAK and the Ministry of State Assets, did not immediately comment on Fragman’s remarks. However, KHNP did respond. "The statements that indicate that KHNP has infringed Westinghouse's intellectual property rights and cannot export its own nuclear technology to Poland without Westinghouse's prior consent are incorrect. There are no obstacles to KHNP's implementation of the nuclear power plant project in Poland," KHNP told Energetika 24.
Image: Energy ministers from South Korea and the USA at the meeting in Washington (courtesy of South Korea's industry ministry)