Meeting with Deputy Prime Ministers
Dmitry Medvedev: I’d like to say a few words about the development of the civilian shipbuilding sector. In the 1990s, this sector declined for reasons known to all of us. In truth, it degenerated. Shipyards were barely making ends meet, in part thanks to the percent of defence contracts. They have recently increased their contract portfolios, which include contracts under the state armaments programme. But the number of civilian vessels and pieces of civilian marine equipment is still inadequate and is smaller than what they do under defence contracts. We must adjust this imbalance. We need not only a powerful navy, but also civilian fleets that can tackle navigation and transportation tasks, Arctic development, the numerous shelf projects, and the production of marine biological resources. The President and the Government adopted decisions and issued instructions to this end.
Dmitry Medvedev: "We need not only a powerful navy, but also civilian fleets that can tackle navigation and transportation tasks, Arctic development, the numerous shelf projects, and the production of marine biological resources. The President and the Government adopted decisions and issued instructions to this end."
Mr Rogozin, you are responsible for this sector. Please tell us about its overall performance. And we definitely want to hear about the integration of Crimean shipyards and the use of their capacities. We have visited several shipyards there. How are they doing now?
Dmitry Rogozin: Mr Prime Minister, you correctly pointed to an imbalance in the shipbuilding industry, which is producing more military than civilian ships. It’s a distinguishing feature of our shipbuilding industry that it has the capacity for the production of both civilian and military equipment.
According to the preliminary results for 2014 – although the year is not over yet, 81 percent of our shipbuilding capacity is being used to fulfil military contracts and 19 percent for civilian projects. This means that this year the number of civilian shipbuilding contracts has grown 6.6 percent and military contracts 13.8 percent. We have not balanced this ratio. The overall production volume is growing, with more contracts signed, but there are more military than civilian projects. I believe that this situation will persist until 2017, a peak year in terms of military shipbuilding contracts…
Dmitry Medvedev: This is also how it was in the Soviet era. The fact is we bought more civilian vessels abroad, while all our warships were built at Soviet shipyards.
Dmitry Rogozin: At this point, the shipyards are working to capacity. For example, Sevmash and Zvyozdochka have as many contracts as in the best Soviet periods, and so they are working without respite. They even need workers. We are training welders and other workers for them in other Russian regions. There is a shortage of [skilled] workers.
In general, we have to place contracts with companies that are not members of the United Shipbuilding Corporation to ensure the development of civilian shipbuilding. A number of large Russian companies such as Novatek or Rosneft are building their own shipyards, for example the 82nd Ship Repair Plant, which used to be a member of USC but is now an independent company that will build Arctic offshore equipment for Rosneft in the Murmansk Region. Novatek plans to do likewise – it will build a modern shipyard to produce Arctic-class floating structures and ships.
Dmitry Rogozin: "We have to place contracts with companies that are not members of the United Shipbuilding Corporation to ensure the development of civilian shipbuilding. A number of large Russian companies such as Novatek or Rosneft are building their own shipyards, for example the 82nd Ship Repair Plant."
The USC companies have built and delivered stationary and floating ice-class drilling rigs such as Prirazlomnaya, Arkticheskaya, Polyarnaya Zvezda (Polar Star) and Severnoye Siyaniye (Polar Lights) rigs. They are now completing the first of a group of three icebreakers. We launched this project. The shipyard in Vyborg is building three 16 MW diesel-powered sea-going icebreakers. The Baltic Shipyard is building a 25 MW diesel icebreaker, a 60 MW nuclear-powered variable-draft icebreaker and a floating nuclear power station, Akademik Lomonosov, to produce electricity for outlying regions.
As for passenger liners, five vessels with a passenger capacity of 120 and 176 people are being built in Moscow and Zelenodolsk. We have started building passenger liners of this class.
Dmitry Medvedev: River-going steamships?
Dmitry Rogozin: River ships of the river-sea class in Zelenodolsk. We can also use them in the interests of our Black Sea coast.
In all, 20 major enterprises, mostly affiliated with the United Shipbuilding Corporation, are currently building 115 ships of various tonnage and designation. I’m talking about civilian ships here.
While aiming to implement the Presidential State of the Nation Address, we are now assessing our plan after 2020 when the number of military contracts will decrease, and when we’ll have to fulfill civilian contracts at military shipyards. The Ministry of Industry and Trade has analysed the entire demand for sea-going and river-going ships and shelf-development equipment from major national commercial customers, as well as state customers, including the Ministry of Transport, Rosatom and the Federal Agency for Fisheries. A combined long-term plan up to 2030, formulated by the Ministry of Industry and Trade, has been approved. Under this document, we will build 300 multipurpose civilian ships. A plan for using the production capacity of the shipbuilding facilities has been formulated under this combined plan.
Understandably, the implementation of an investment project to establish the Zvezda shipbuilding complex in Bolshoi Kamen, the Primorye Territory, part of the Russian Far East, will serve as the basic shipbuilding asset for shelf projects. Work is proceeding there, and I visited that company on 30 August. They should finish installing some modern equipment by January. This equipment is being installed at in the shops full speed ahead, and total production volumes and project costs amount to 111 billion roubles. The shipyard construction project is also financed by a consortium involving our leading companies that will develop the continental shelf. From 2019, we’ll start building tankers and bulk carriers of up to 350,000 tonnes deadweight, as well as gas tankers with a capacity of up to 300,000 cubic metres, and we’ll also create high-tech and profitable ice-resistant ships. Starting in 2019, we’ll completely meet civilian shipbuilding targets for the Arctic region. But this does not mean that nothing will happen before then. From 2016, we’ll be able to build supply ships there. Our leading companies are interested in these sufficiently profitable and easy-to-use ships. By the way, tomorrow I’ll chair a meeting with the United Shipbuilding Company’s Board of Directors and Rosneft at the Government House.
Dmitry Rogozin: "The implementation of an investment project to establish the Zvezda shipbuilding complex in Bolshoi Kamen, the Primorye Territory, part of the Russian Far East, will serve as the basic shipbuilding asset for shelf projects. Work is proceeding there, they should finish installing some modern equipment by January. This equipment is being installed at in the shops full speed ahead, and total production volumes and project costs amount to 111 billion roubles."
And now I would like to say a few words about Crimea. Replying to your question, I would like to note that Dmitry Kozak and I have repeatedly discussed this issue, and major shipbuilding facilities are located there. True, their technological potential has become rather obsolete, but nevertheless, we have agreed that our leading shipbuilding enterprises will patronise them, sign various contracts and share their contracts, too. For example, the unique Zaliv Plant in Kerch has a dry dock measuring 360 metres long and 60 metres wide. Theoretically, it’s even possible to build aircraft carriers there. The plant has already signed contracts and has started building two Project A-145 passenger hydrofoils. There are plans to build ten such hydrofoils. This will almost eliminate any problems tourists have in getting to Crimea.
Speaking of the Morye Plant, I want to say that the Pella Shipyard in St Petersburg will also be involved in these projects. This shipyard specialises in machining soft metals, and therefore contracts are not only possible, but they are already being awarded.
On the whole, we are working
hard. Mr Medvedev, I would only like to note that we will be unable to change
the ratio between military and civilian technology in the near future, but both
military and civilian output continues to grow.
Dmitry Medvedev: Of course, these Crimean enterprises should become affiliated with some major Russian companies that are alive, so to say, and which have the necessary technologies because they, of course, will be unable to develop on their own.
The plans sound good, and the ideas
regarding the industry’s development are also clear. I would only like to note
one thing. Even despite the current situation and the need for import
substitution, our shipbuilders should understand that we will not buy just any
junk. This means that they should build modern equipment and technology, not old
Soviet-era ships but modern ships that meet international standards. The state
will buy them on this condition alone because the reversion to Russian
production facilities and import substitution policies should not be seen as an
agreement to buy anything just because it’s manufactured in Russia. This would be a mistake.
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