"The energy issue is a very important issue, and it is the main force that drives our developments," said Prime Minister Ali Mohammed Mujur at a ceremony after the signing of the agreement with Houston-based Powered Corporation.
Yemen, one of the poorest countries in Arab world, is looking to build nuclear plants to generate electricity and to desalinate sea water in order to meet the needs of its urban population and boost the country's industrial development, government officials said.
The Gulf Arab country hopes to diversify and expand its energy resources due to declining oil production. Yemen produces 330,000 barrels a day, down from 480,000 barrels few years ago.
"We are going for a build, own and operate model," said Mustafa Yahia Bahran, Electricity and Energy Minister, referring to a plan that has the company that builds the plants also owning and operating them. The projects will abide by international regulations in compliance with guidelines set by the U.N. nuclear watchdog, officials said.
Bahran said the project will also attract foreign investment and bring Yemen closer to meeting the requirements needed for a full membership in the Gulf Cooperation Council.
The association of energy-rich Arab states in the Persian Gulf includes Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, Qatar and Oman.
The GCC as well as Jordan, Egypt and Turkey in recent months have announced that they were interested in developing peaceful nuclear programs.
Iran's progress in building its nuclear facilities has sparked a rush among Arab countries to look at programs of their own, raising the possibility of a dangerous proliferation of nuclear technology in the volatile region.
The United States accuses Iran of secretly trying to develop nuclear weapons. Iran denies the claims and says its program is for peaceful purposes including developing electricity.