China will hold talks this month with France's Areva SA for possible contracts to build two nuclear reactors that were originally awarded to Toshiba Corp's Westinghouse Electric Co, a Chinese official said.

Areva may build the reactors at Yangjiang in Guangdong Province, among four earmarked in a $5.3 billion contract for Westinghouse, said Xu Damao, a senior consultant to project operator China Guangdong Nuclear Power Holding Co.

Westinghouse could instead get a contract for two reactors at Haiyang in Shandong, in addition to its two at Sanmen in Zhejiang, he said.

Paris-based Areva and Westinghouse, headquartered in Pennsylvania, are competing to build as many as 26 more reactors by 2020 as China turns to atomic energy to cut pollution and reliance on oil.

"This will help China diversify technology sources for nuclear power," said He Jun, a senior analyst with Beijing-based consultancy Anbound Group.

Areva spokesman Charles Hufnagel and Guangdong Nuclear spokesman Li Zhiyuan declined to comment. Westinghouse spokesman Vaughn Gilbert said he couldn't immediately comment.

Westinghouse outbid Areva and Russia's AtomStroyExport to build four reactors after almost two years of negotiations and lobbying by the three companies, which were short listed by China in February 2005.

US Energy Secretary Samuel Bodman and Ma Kai, head of China's National Development and Reform Commission, signed an agreement in Beijing on December 16 awarding the contracts to Westinghouse. The US company was bought by Japan's Toshiba for $4.16 billion in October.

"The change may not be a big deal for Westinghouse as it will still get four reactors with a similar contract value," said Simon Lee, an analyst with Morgan Stanley Asia Ltd. "The only thing is that Westinghouse may need to share the market for third-generation reactors in China with Areva if the French company wins the Yangjiang reactors."

Formal contract talks with Areva, the world's biggest maker of nuclear reactors, will begin around the week-long Chinese New Year holiday that starts on February 18, Xu at Shenzhen-based Guangdong Nuclear said.

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