By Karina Grazina

ZARATE, Argentina (Reuters) - Argentina, whosepioneering nuclear energy program was sidelined for years, hasembarked on an ambitious plan to build nuclear power plantsagain to ease reliance on dwindling fossil fuels.

Argentina opened the first nuclear power plant in LatinAmerica in 1974. But the country stopped at two plants when thetechnology fell out of favor as accidents such as the 1986Chernobyl disaster raised safety concerns worldwide.

President Cristina Fernandez's government is finishingconstruction on the South American country's long-stalled thirdnuclear power plant, and plans to build another two by 2025.

The goal is for 15 percent of Argentina's power to comefrom nuclear sources by 2025, up from 6 percent currently,according to official estimates. This would reduce dependenceon shrinking natural gas and crude oil reserves, which nowaccount for about 60 percent of Argentina's electrical power.

Argentina aims to resume mining uranium. It will also starta program to enrich the metal for energy use. This would put itin a small group of countries that includes the United States,Russia, China and Brazil, with access to the full nuclearenergy production chain.

"Argentina has all it needs to close the entire nuclearcircuit. It could make weapons but no one suspects it will useits nuclear technology for warmongering. It is one of very fewcountries that enjoys that trust," said Daniel Montamat, aformer energy secretary.

Critics say the government's plan is too vague, and wantmore details such as which type of reactors will be used. Butmany experts believe Argentina is well-positioned to expand itsnuclear power industry thanks to home-grown technology, aqualified workforce and a population that is more accepting ofnuclear reactors than residents of some other countries.

Argentina aims to finish building its Atucha II power plantby September 2011 and will start work in late 2012 to extendthe shelf-life of its Embalse plant, which came on line in1984. (Graphic: http://link.reuters.com/xek42p )

The time frame for building two additional nuclear powerplants has not yet been set.

Rapid growth in Latin America's No. 3 economy since 2003has stoked energy demand while low electricity and natural gasrates have discouraged private investment, prompting a steadyslide in fossil fuel reserves.

The government has had to ration supplies at times andboost costly fuel imports to avoid power shortages, stokinghigher state spending on subsidies and reducing the tradesurplus.

Argentina's fuel imports jumped 69 percent from Januarythrough July from the same period of 2009, to total $2.75billion. The country was expected to import 14 cargoes ofliquefied natural gas this year to boost supplies.

"In the case of natural gas, about 10 percent is importedbut this represents a third of the total cost. This is becausegas imports cost four to five times more than what is paid tolocal producers," said Alieto Guadagni, another former energysecretary.

ENRICHED OR NOT?

Latin America is home to just five nuclear power plants.Mexico has one, and Brazil, like Argentina, has two and isbuilding a third.

Argentina is resuscitating a uranium enrichment facility inRio Negro province, which could start producing small amountslate next year. And it hopes to retap the Sierra Pintadauranium deposit, where legal troubles have halted work.

The country also plans to produce small-potency nuclearreactors that could be sold abroad. The National Atomic EnergyCommission is about to start building a prototype for thesereactors, which would produce 25 megawatts of power and couldsupply electricity to up to 100,000 people.

"The world is looking more closely at small reactors suchas these. In mining, for example, they could be very useful,"said Norma Boero, the commission's president, adding thatCanada has already shown interest in this technology.

Argentina's two operating nuclear power plants are run onnatural uranium as opposed to enriched uranium, which can beused to make bombs. But Argentina plans to adapt as the worldturns increasingly to enriched uranium.

"It's very possible that enriched uranium will be used atour next power plant's reactors. I think Argentina is veryclose to joining the ranks of countries that have both fuelcycles," said Jose Luis Antunez, vice president of state-runNucleoelectrica Argentina, which manages the production andsale of nuclear power.

The fact that no decision has been made on what reactorswill be used, among other things, has sparked some criticism.

"The government hasn't defined what it will do with uraniummining, it hasn't defined whether it will use enriched ornatural uranium for the plant it wants to build, and above allit has no financing lined up to carry out these endeavors,"said Jorge Lapena, a former state energy official.

"This is not a real plan," he added. (Additional reporting by Juliana Castilla, Denise Luna in Riode Janeiro and Robert Campell in Mexico City; Writing by HilaryBurke; Editing by David Gregorio)