Tag Archives: Dokdo

Tender for Helicopter Carriers May Just Be Formality

Mistral Schematic

Kommersant reports today that United Shipbuilding Corporation (OSK) has gotten the Defense Ministry’s permission to hold an open tender for procurement of helicopter carriers.  The paper concludes the Defense Ministry is refraining from a sole-source purchase of the French Mistral, and will consider similar proposals from OSK’s shipyards.  But the military [at least some military officials] haven’t hidden the fact that they prefer Mistral [but Defense Minister Serdyukov has always maintained they’ve been talking to other suppliers], so the tender could just be a formality. 

OSK President Roman Trotsenko says a special commission from the Ministry of Industry and Trade will conduct the tender, but details are sketchy.  A Defense Ministry source told Kommersant that, without a tender, a deal to buy a helicopter carrier [presumably Mistral] would be considered illegal.  So there won’t be a sole-source buy despite a year of government-to-government talks.

The paper reminds readers of OSK’s recent unsuccessful antimonopoly complaint in regard to the government’s consideration of Mistral.  Although the complaint was not reviewed, it must have had some impact on the decision to compete the helicopter carrier purchase.  Kommersant sources say OSK Board Chairman Igor Sechin also had something to do with it.

Trotsenko says far east shipbuilding plant ‘Zvezda,’ Petersburg’s ‘Admiralty Wharves,’ and Kaliningrad’s ‘Yantar’ will bid for the ships.  ‘Zvezda’ already has a joint venture in place with South Korea’s Daewoo – builder of the Dokdo helicopter carrier.  The OSK President says ‘Admiralty’ and ‘Yantar’ might work with ‘Northern’ shipyard or a foreign builder. 

Kommersant has a letter sent from Sechin to Prime Minister Putin this spring saying not only is Dokdo an alternative to Mistral, but Dutch and Spanish helicopter carriers are as well.

Trotsenko says OSK yards can build a helicopter carrier in 30 months for $500-700 million against a Mistral pricetag of €420-680 million.

Kommersant concludes the tender won’t end the conflict between OSK and the Defense Ministry.  Mistral will remain the latter’s priority.  The paper’s sources don’t know if the military wants to buy Mistral itself or place an order for a new unit in a French shipyard (STX).  OSK hasn’t been able to arrange a cooperative agreement with STX.

Mezhprombank-controlled ‘Northern’ and ‘Baltic’ shipyards will participate in the tender according to a representative of the bank. Kommersant’s sources think Mezhprombank, its owner Sergey Pugachev, and shipyards are the favorites among Russian contenders.  Pugachev was an early supporter of buying French, then building other units in his shipyards.  And, according to Kommersant, the Defense Ministry supports Pugachev.

Alongside Pugachev and Mezhprombank, OSK feels its chances to win the tender aren’t great.  Moscow Defense Brief analyst Mikhail Barabanov also says Mezhprombank yards are the favorites to build Mistral in Russia.  Such a deal’s been reached at a political level between Paris and Moscow, so the tender might just be a formality.  CAST’s Konstantin Makiyenko agrees.  But he thinks Mistral orders will go to ‘Baltic,’ since ‘Northern’ is loaded with frigate and corvette orders.  Meanwhile, OSK would like to buy both yards from Mezhprombank, but the sides haven’t reached agreement on a price.

Pressing the French on Mistral

Vladimir Socor has a good piece describing Russian shipbuilders’ complaints to the Federal Antimonopoly Service (FAS) about the Mistral purchase as another way to press Paris to finalize the deal on Moscow’s terms.  Socor says: 

“In line with the Russian government’s tactics, [Deputy PM and OSK Board Chairman] Sechin is signaling that Moscow could turn to other international shipbuilders, or ultimately to Russian shipbuilders, if France does not sweeten the terms of the Mistral deal for Russia.” 

“Thus, Sechin’s subsidiaries [Yantar and Admiralty] ostensibly seek anti-monopoly action in a case handled by Sechin himself for the Russian government.” 

This points up the bizarre circumstance in which Sechin is negotiating with the French, while his OSK subsidiaries complain about the potential deal. 

But, as Interfaks wrote on Wednesday, FAS says it lacks jurisdiction over the complaint from Yantar and Admiralty.  FAS also says there’s no basis for a complaint since no deal for Mistral has been reached. 

The shipyards argue they’ve been excluded from bidding to build amphibious assault ships for the Navy, and the terms of the competition weren’t publicly announced.  Their complaint seems to have merit since, from the outset, the Defense Ministry went directly after a specific ship and supplier, without issuing general requirements for a ship class. 

According to Interfaks, OSK supports Yantar and Admiralty, and calls the Defense Ministry’s actions ‘obscure.’ Its representatives periodically speak of Mistral like a done deal, but how the deal will proceed remains unclear.  An OSK source says, “And every time such statements deliver a blow to the self-esteem of domestic shipbuilders who know how to make these ships.”  

And, as Socor notes, talks continue also with the Dutch and Spanish [as Defense Minister Serdyukov has always pointed out] and now the possibility of a deal with the South Koreans has been thrown in, further roiling the waters. 

Izvestiya yesterday said OSK President Roman Trotsenko sent a letter to Defense Minister Serdyukov proposing a review of the military’s plans to acquire Mistral.  In its place, Trotsenko suggests building the South Korean Dokdo under license in a Russian shipyard.  He says he can build it in three years, and more cheaply than Mistral by one-third.  OSK has a joint production agreement with Dokdo builder Daewoo. 

Dokdo

The Defense Ministry insists Russian builders demurred when asked if they could build these ships.  Izvestiya doubts Trotsenko’s offer is realistic given the lack of available Russian buildingways.  But the paper concludes the appearance of the letter shows the struggle for the amphibious carrier contract isn’t over.