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 government said last year it plans by 2030 to have 13 nuclear reactors at eight separate plants with a combined capacity of 15,000 megawatts—representing 7% of the Vietnam's total generation capacity, Deputy Minister of Industry and Trade Hoang Quoc Vuong said Wednesday.

"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," Mr. Vuong said at the signing ceremony in Hanoi.

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.

"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, a technology used by Hitachi Ltd. and Toshiba Corp. 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. Called the International Nuclear Energy Development of Japan Co., it 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. The government will cover the entire ¥2 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 2022, immediately after two Russian reactors planned for nearby. The sites of the two twin-reactor plants are 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 ¥20 trillion a year in infrastructure-related exports, including nuclear reactors, according to the JBIC. 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 since meltdowns struck three of the Fukushima Daiichi plant's reactors. The government has frozen plans to build a dozen new reactors and so boost nuclear's share of electric-generation capacity 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 advanced boiling-water reactors in Texas has stalled in the wake of the Fukushima accident, a number of developing economies, including Vietnam and Turkey, have signaled their continued interest in Japanese technology.

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

The feasibility study will assess the business case, safety requirements and geographic suitability of the sites for the two planned reactors. 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 what will be the country's first nuclear-power plant, Ninh Thuan 1. (The proposed Japanese plant would be Ninh Thuan 2.) 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 & Vu Trong Khanh - The Wall Street Journal - September 28, 2011