By Chester Dawson and Vu Trong Khanh

Of THE WALL STREET JOURNAL

In Japan's most aggressive move to promote exports of nuclear technology since the Fukushima Daiichi accident in March, a Tokyo-based utility consortium signed a deal with Vietnam on Wednesday to conduct a feasibility study for two new reactors.

The agreement comes as a lifeline to Japan's nuclear industry, which harbors ambitions of expanding abroad, even as its future is in doubt at home. Amid a post-disaster reassessment of energy policy, the government has vowed to reduce dependence on nuclear power for domestic electricity generation. But it has continued to push nuclear technology in overseas markets.

For Vietnam, where rapid economic growth has increased demand for electricity, the contract with Japan Atomic Power Co. offers a way to diversify its energy mix beyond two Russian nuclear reactors currently under construction. The Vietnamese government said last year it plans 13 nuclear reactors at eight separate plants with a combined capacity of 15,000 megawatts by 2030.

"This important milestone ... shows Vietnam's determination to develop nuclear power plants, especially in the face of global economic difficulties and after the incident at Japan's Fukushima plant," Vietnamese Deputy Minister of Industry and Trade Hoang Quoc Vuong said at the signing ceremony in Hanoi. He said he expects nuclear power to account for 7% of Vietnam's installed generation capacity by 2030.

Lessons from the Fukushima disaster will be taken into account in the Vietnamese project, according to officials from Japan Atomic Power, a consortium of Japan's nine nuclear utilities, including Fukushima Daiichi plant operator Tokyo Electric Power Co. (9501.TO).

"We pledge to work hard to ensure the nuclear power development of Vietnam," said Japan Atomic Power President Yasuo Hamada.

Vietnamese officials said Japan will build advanced boiling water reactors (ABWR), a type of technology used by Hitachi Ltd. (6501.TO) and Toshiba Corp. (6502.TO). But Japan Atomic Power officials in Tokyo said no decision had been made on the type or contractor for construction and operation.

On Thursday, a larger consortium of 13 Japanese companies, including the nine electric utilities, along with Hitachi and Toshiba, plan to sign another memorandum with Vietnam Electricity to start talks on reactor bids. That Tokyo-based entity, the International Nuclear Energy Development of Japan Co., was set up last year under the trade ministry to promote reactor exports.

The Japanese government is expected to foot most of the bill for the plant through development aid and export promotion programs run by state-owned Japan Bank for International Cooperation and Nippon Export and Investment Insurance. It made a down payment on that by underwriting the entire Y2 billion ($26 million) cost of the 18-month feasibility study.

The planned Japanese reactors will each have a 1,000-megawatt capacity and are slated to begin operation in 2021 and 2012, immediately after the startup of two Russian reactors currently under construction nearby. The two plants are located about 20 kilometers apart along the coast of southern Vietnam, about 400 kilometers northeast of Ho Chi Minh City.

Before the March 11 earthquake and tsunami, Japanese industrial equipment manufacturers had hoped to export Y20 trillion a year in nuclear plants and other infrastructure-related business, according to the Japan Bank for International Cooperation. Last year, the Japanese trade ministry highlighted exports of nuclear-power plants as a pillar of its long-term growth strategy.

Japanese public support for nuclear energy has plummeted following meltdowns at three of the Fukushima Daiichi plant's reactors. The government has frozen plans to build a dozen new reactors to boost nuclear generation of electricity to 50% by 2030.

But that cooling of support for nuclear power hasn't affected government efforts to export commercial reactors overseas. While a Japanese-government backed project to build two Toshiba ABWR reactors in Texas has stalled in the wake of the Fukushima accident, a number of developing economies have signaled their continued interest in Japanese technology, including Vietnam and Turkey.

"We've received only positive feedback from Vietnam, which has told us it's very anxious to get things underway," said Youichi Nonaka, a managing director at Japan Atomic Power told reporters at a press conference in Tokyo.

That feasibility study will assess the business case, safety requirements and geographic suitability of the site for the two planned reactors. But Japan Atomic Power said it was highly unlikely the study would conclude the project isn't viable, citing preliminary research indicating the project is sound.

Separately, an official with Vietnam Electricity said Wednesday that Vietnam is negotiating with Russia to borrow $8 billion to build its first nuclear power plant, the Ninh Thuan 1. Russia's state nuclear energy corporation, Rosatom, has been chosen to build the plant, with construction to begin in 2014 and be completed by 2020.

-By Chester Dawson and Vu Trong Khanh, The Wall Street Journal; +81-3-6269-2837; chester.dawson@wsj.com

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