Ukranian shipbuilding faces serious crisis

Kiev - Ukranian shipbuilding is on the verge of a serious crisis,due to the breakdown in relations with Russia and termination of the $4 billion contract between the two sides. Under the terms of the contract with the Russian government, Russia would provide guarantees for investment in joint development of equipment

Kiev - Ukranian shipbuilding is on the verge of a serious crisis, due to the breakdown in relations with Russia and termination of the $4 billion contract between the two sides, writes Eugene Gerden. Under the terms of the contract with the Russian government, signed by former Ukraine president Viktor Yanukovich, Russia would provide guarantees for more than US$4 billion investment in joint development of equipment and components, and introducing energy-saving technologies at Ukranian shipyards.

Under the contract, Russia planned to order ice-class LNG tankers. Termination of the contract has brought leading Ukranian shipbuilders to the brink of collapse. According to Alexey Timofeev, director general of Smart-Holding, which operates the Kherson yard, one of Ukraine’s largest, Russian orders brought in around 90% of the company’s revenue. ìHe said that the company’s losses have already reached US$200 million. At the same time, Nikolaev, another leading Ukranian shipbuilder, is experiencing serious difficulties folllowing termination of the Russian contract to supply turbomachinery.

The situation is aggravated by the suspension of loans and guarantees for the industry from most Ukranian banks, and despite a recent agreement with the EU, the majority of EU companies prefer not to build ships in the Ukrane. Ukranian analysts believe that termination shipbuilding agreements will have a negative effect on Russia. According to Victor Lissitzky, president of the Association of Shipbuilders of Ukraine, Russia currently lacks capacity for building large vessels.

He says that the Baltic Shipyard is relatively small and is poorly sited on the Neva river, while Severodvinsk, proposed by the Russian government as a future commercial shipbuilding centre, suffers from unfavourable climatic conditions.

(Source: The Motorship)

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