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Areva says India keen to start using EPR reactor

PARIS (Reuters) - Negotiations about the sale of two French nuclear reactors to India are at an advanced stage and Indian authorities are keen to start using French nuclear technology, reactor builder Areva (AREVA.PA) said on Wednesday.

A deal with the Nuclear Power Corporation of India Limited (NPCIL) would be a major breakthrough for Areva, which has been embarrassed by cost overruns and long delays at two EPR reactors under construction in Finland and France.

"India always takes a little time to decide on major public investments, but it is fair to say that the NPCIL is keen to work with the EPR, as recent statements have shown," an Areva spokesman told Reuters.

Indian Foreign Minister Salman Kurshid told French daily Le Figaro on Friday that the nuclear agreement being negotiated with Areva had reached "an advanced stage".

Khurshid added that security issues raised by Japan's 2011 Fukushima nuclear disaster would have an impact on the cost of energy produced, but a final agreement was within reach.

He seemed to hint at a possible signature during a planned state visit to India by French President Francois Hollande mid February. Areva shares have risen about 5 percent following Khurshid's comments.

The World Nuclear Association expects India's nuclear capacity will grow fourfold to 20,000 megawatts by 2020 from just under 5,000 MW today, making it the third-biggest market after China and Russia.

The talks between Areva and the NPCIL are focused on economic and technical issues, but most of the post-Fukushima safety improvements to Areva's EPR reactor have been agreed upon so the debate is now mostly focused on price.

The Areva spokesman said safety issues had been discussed extensively between the Indian and French nuclear watchdogs and between Areva and state-owned NPCIL, and that the changes made to the EPR following the review are minor.

The third-generation European Pressurised Reactor (EPR), conceived following the 1986 Chernobyl disaster, has a double containment wall and a "core catcher" to contain core meltdown. Its 1,600 megawatt capacity is the largest on the market.

Following the March 2011 Fukushima disaster, Areva has improved the autonomy and resistance of the EPR's back-up systems and added facilities to connect mobile back-up power.

Unlike many other nuclear projects where Areva is in the running, the India bid is not a tender where Areva needs to compete with other suppliers.

India, which is finalising the construction of a Russian reactor, wants the EPR to diversify its nuclear technology and is not negotiating with other potential suppliers.

Areva will not only sell the reactors but also the nuclear fuel for the first 25 years of their working life.

The planned site for the EPR reactors in Jaitapur - on the subcontinent's Arabian Sea coast, 400 km south of Bombay and 230 km north of Goa - could receive up to six nuclear reactors, though at the moment only two EPRs are under consideration.

An agreement with NPCIL would be a major breakthrough for Areva, which has been hit by delays and cost overruns for the EPR reactor it is building in Olkiluoto, Finland.

The plant, being built by Areva and its partner Siemens (SIEGn.DE), was scheduled to start operations in 2009. Costs were projected at 3 billion euros initially but have spiralled to about 8.5 billion euros. A second EPR, built by French utility EDF (EDF.PA) is also years behind schedule and billions over price.

The two other EPRs under construction, in Taishan, China, are on track.

In October, Czech group CEZ CEZPsp.PR threw out Areva's bid to expand the Temelin nuclear power plant, leaving U.S. and Russian firms in the race, saying Areva failed to meet "crucial requirements" in the tender. Areva is appealing that decision.

Areva CEO Luc Oursel said last month his firm still hopes to sell 10 EPRs by the end of 2016. (Editing by Mark Potter)