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Iranian energy sector attracts investment

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Iranian energy sector attracts investment
An Iranian technician works at Bushehr nuclear power plant in the Bushehr Port on the Persian Gulf, 1,000 kms south of Tehran, Iran on February 25, 2009. Iranian officials said the long-awaited project was expected to become operational last fall but its construction was plagued by several setbacks, including difficulties in procuring its remaining equipment and the necessary uranium fuel. UPI/Mohammad Kheirkhah | License Photo

TEHRAN, Aug. 25 (UPI) -- Iran, anxious to break out of the latest round of U.N. sanctions, is broadening its foreign contacts to expand its energy resources.

Iran is to cooperate with the United Arab Emirates and Germany, who are investing $1.1 billion to construct several conventional power plants, the Fars News Agency reported Wednesday.

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Iran's Energy Ministry issued a statement noting, "Germany has invested $445 million in construction of the Pareh-Sar combined cycle power plant in northern Iran, while the Emirates has invested $720 million in construction of a gas power plant as well as a combined cycle power plant in Isfahan and Shiraz."

A recently released market study concludes that Iran will account for 17.08 percent of Middle East and Africa regional power generation within the next four years. In 2009 natural gas was the dominant fuel for producing electricity in Iran, accounting for 57 percent of Iran's primary energy demand, with oil accounting for 41 percent and hydroelectric power meeting 1.4 percent of the country's energy demands.

Germany has had a long involvement in Iran's energy sector, with its first significant project being a nuclear power facility at Bushehr. In 1975 German firm Kraftwerk-Union signed a contract worth an estimated $4 billion-$6 billion to construct two nuclear reactors.

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Following the overthrow of the shah's regime in January 1979 and the establishment of the Islamic Republic, Kraftwerk-Union slowed work on the two reactors, withdrawing completely in July, leaving one reactor 50 percent complete and the other 85 percent complete, claiming that their action was based on Iran's non-payment of $450 million in overdue payments despite having already received $2.5 billion of the total contract.

Sixteen years later Russia signed a contract estimated at $700 million-$1.2 billion to supply a light water reactor for Bushehr, with the contract stipulating for the facility's spent fuel rods be returned to Russia for reprocessing.

On Saturday, Iran began loading nuclear fuel into the Bushehr reactor in a ceremony attended by senior Iranian and Russian nuclear officials, beginning a process estimated to be completed next month.

The German-Emirates investment in Iran's energy sector despite the global recession is typical of foreign interest in the country. Iranian Minister of Economic Affairs and Finance Shamseddin Hosseini recently announced that Iran has attracted billions of dollars of foreign investment despite the recession, telling journalists, "Iran ranked the sixth in attracting foreign investment in spite of the fact that foreign investment witnessed a 35 percent ... decline in the world."

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