Iran and Russia sign nuclear fuel deal opposed by US

TEHRAN - Russia and Iran have signed a nuclear fuel supply deal long opposed by Washington, paving the way for Iran to start up its first atomic reactor next year.

The agreement, inked by the two countries' nuclear energy chiefs at the Bushehr atomic plant in southern Iran, came as Tehran faced heightened pressure from the United States, which accuses it of secretly developing nuclear weapons.

Iran, Opec's second largest oil producer, denies the charge and has received strong backing from Moscow, which is keen to play a major role in expanding Iran's nuclear energy programme.

"This is a very important incident in the ties between the two countries and in the near future a number of Russian experts will be sent to Bushehr to equip the power station," Iranian state television quoted Alexander Rumyantsev, head of Russia's Federal Atomic Energy Agency, as saying.

A key part of the agreement obliges Tehran to repatriate all spent nuclear fuel to Russia. Moscow hopes this will allay US worries that Iran may use the spent fuel, which could be reprocessed into bomb-grade plutonium, to develop arms.

The International Atomic Energy Agency (IAEA), which has been probing Iran's nuclear programme for over two years, said it would also keep a careful eye on Tehran's use of the fuel.

Spokeswoman Melissa Fleming said inspectors would "monitor closely the use of the fuel and where it goes" as part of agency safeguards monitoring aimed at ensuring no nuclear materials are diverted to any covert weapons activities.

Rumyantsev said Bushehr would start operating in late 2006.

"We are planning the physical launch at the end of 2006. About half a year before this the first delivery of fuel will take place," the Itar-Tass news agency quoted him as saying.

Iranian officials put the plant's launch about six months earlier in mid-2006. Diplomats in Tehran said they may have been referring to the reactor's initial test phase.

Rumyantsev said the first batch of enriched uranium fuel was in Siberia ready to be shipped.

Disagreements over the timing of the shipment had delayed the deal, due to be signed in Tehran on Saturday. Tehran wanted Russia to send the fuel earlier, Iranian officials said.

Iran said long delays in signing the agreement, which has been under negotiation for more than two years, were technical and had nothing to do with pressure exerted by Washington, which wants Russia to halt nuclear cooperation with Iran.

"My understanding is that international developments have had no effect on this contract," Mohammad Saeedi, deputy head of Iran's Atomic Energy Organisation, told state radio.

Once operational, Bushehr will generate 1,000 megawatts of electricity. Initiated before Iran's 1979 Islamic revolution and badly damaged during the 1980-88 Iran-Iraq war, the project was later revived with Russian help and has cost about US$800 million ($1120 million).

Iran has announced plans to build several more power plants, generating 7,000 MW from nuclear power by 2021. Russia hopes to claim a significant share of this new business.

The Bushehr power station has aroused less concern in the West than Iran's plans to produce its own nuclear fuel for future reactors using uranium mined, processed and enriched inside the country.

The European Union and United States want Iran to scrap its uranium enrichment plans entirely. Iran has refused but has suspended enrichment while it tries to reach a negotiated settlement with the European Union.

- REUTERS