What 123 Agreement

A 123 Agreement is named after Section 123 of the US Atomic Energy Act. It is a prerequisite for the United States to transfer civilian nuclear technology, equipment and materials to another country.

Without such an agreement, American companies cannot build nuclear reactors, supply fuel or provide advanced nuclear technology abroad.

The agreement signed by Saudi Energy Minister Prince Abdulaziz bin Salman and US Energy Secretary Chris Wright, together with a bilateral safeguards agreement, provides the legal basis for long-term cooperation in civilian nuclear energy while committing both countries to internationally recognised standards for nuclear safety and security.

Why Saudi Arabia wants nuclear power

Saudi Arabia is one of the world’s largest oil producers, but domestic demand for electricity has been rising steadily because of population growth, industrial expansion and major development projects under Vision 2030.

Currently, much of the Kingdom’s electricity is generated by burning oil and natural gas. Developing nuclear power would allow Saudi Arabia to diversify its energy sources, reduce domestic oil consumption and free up more crude for export.

Nuclear energy also provides reliable, round-the-clock electricity that complements renewable energy sources such as solar and wind, which are becoming increasingly important in the Kingdom’s long-term energy strategy.

What the agreement includes

The agreement creates a framework for broad cooperation in civilian nuclear energy.

It allows both countries to exchange technical expertise, scientific knowledge and advanced technologies. It also enables US companies to compete for future projects involving nuclear reactors, fuel-cycle services, engineering, maintenance and specialised equipment.

According to reports, the partnership is expected to last around 30 years, making it one of the most significant long-term energy agreements between the two countries.

How the US benefit

The agreement offers significant economic and strategic advantages for the United States. American nuclear technology companies are expected to play a central role in designing, building and supporting Saudi Arabia’s future civilian nuclear industry. That could generate billions of dollars in contracts and create long-term business opportunities for US firms.

Beyond commercial benefits, the agreement reinforces Washington’s decades-old strategic relationship with Riyadh and strengthens cooperation in advanced technologies, energy security and infrastructure development. US officials have described the agreement as an important step in expanding commercial ties while promoting innovation and economic growth.

What it means for Saudi Arabia

For Saudi Arabia, the agreement represents another milestone in its Vision 2030 transformation programme. The Kingdom has long expressed its ambition to build a civilian nuclear sector that can support economic diversification, reduce carbon emissions and meet growing electricity demand.

The deal gives Saudi Arabia access to American expertise and technology, which are regarded among the most advanced in the global nuclear industry. It also signals growing international confidence in the Kingdom’s long-term economic and industrial ambitions.

What happens next

Although the agreement has been signed, several steps remain before projects can begin. The deal will now be submitted to the US Congress for review, as required under American law. Once approved, both countries can begin implementing the agreement through individual commercial contracts, technical partnerships and infrastructure projects.

Developing a civilian nuclear industry is a long-term process that involves site selection, reactor design, licensing, construction and workforce development. As a result, it could take several years before Saudi Arabia’s first nuclear power plant becomes operational.

What is the wider impact?

The agreement is expected to have implications well beyond the energy sector. Economically, it could generate billions of dollars in investment, create new opportunities for technology transfer and strengthen industrial cooperation between the two allies.

For Saudi Arabia, it supports efforts to build a more diversified economy, develop high-tech industries and enhance long-term energy security. Reliable nuclear power would also support large-scale industrial projects and future economic growth.

Leading supplier

For the United States, the agreement reinforces its position as a leading supplier of civilian nuclear technology while strengthening one of its most important strategic partnerships in the Gulf.

More broadly, the deal highlights the growing role of nuclear energy in helping countries meet rising electricity demand while reducing dependence on fossil fuels. As nations around the world seek cleaner and more reliable sources of energy, civilian nuclear power is increasingly being viewed as part of the global energy transition.

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