Will Rosneft Boost Russian Naval Construction?

Russian state-controlled oil giant Rosneft is turning Shipbuilding Complex (SSK) Zvezda into the country’s first large tonnage shipyard. TASS recently published a backgrounder that detailed what’s been happening there.

Located in Bolshoy Kamen near Vladivostok, SSK Zvezda is supposed to produce the ships and equipment Rosneft needs to explore and exploit offshore oil and gas. However, it also has potential to boost Russia’s naval ship and submarine construction and repair in the Far East.

Rosneft took over Zvezda in late 2015 in consortium with government holding company Rosneftegaz and Gazprombank. The effort to expand its civilian shipbuilding capacity began in 2009 as a partnership between state-owned United Shipbuilding Corporation (OSK) and South Korea’s Daewoo. The latter quit the project in 2012.

Having displaced OSK, Rosneft became principal holder of Far East Plant (DVZ) Zvezda and some small affiliated shipyards. DVZ Zvezda is the only Russian shipyard in the Far East capable of repairing and modernizing nuclear-powered submarines and ships up to 13,500 tons displacement. It began modernizing two project 949A Oscar II-class nuclear-powered guided missile submarines in 2013.

Zvezda complex in Bolshoy Kamen

This image shows the naval shipyard at top with its grayish roof, launch basin in front, and a submarine in drydock alongside if you look carefully. The SSK Zvezda facility is pretty much everything else — the reddish roof of the monstrous production building and the whitish buildingway with its yellow cranes visible.

SSK Zvezda will produce a range of medium and large tonnage vessels, up to 350,000-tons displacement, and other sea-going equipment to support offshore hydrocarbon development in the Pacific and Arctic Oceans. It includes LNG carriers, tankers, drilling platforms, and transport, supply, and seismic survey ships.

The shipyard currently has one 1,200-ton gantry crane made in China, two 320-ton gantry cranes, and four 100-ton tower cranes on its open buildingway. In July, the shipyard took delivery of a 40,000-ton transport-transfer dock built by the Qingdao Beihai Shipbuilding Heavy Industry Company. Rosneft expects SSK Zvezda’s development to cost $2.4 billion.

It reportedly will begin construction of medium-sized ships in 2019 with a workforce of 1,500 employees. By 2024, it expects to have a large-ship drydock and full-cycle fabrication facilities in operation with 7,500 workers. The shipyard’s order book already includes ten 80,000- to 120,000-ton tankers, ten shuttle tankers, and supply vessels. Leveraging DVZ Zvezda’s nuclear expertise, SSK Zvezda will also build three Lider-class nuclear-powered icebreakers, according to a September 14 announcement by Russian Deputy Prime Minister Yury Borisov.

President Vladimir Putin visited the shipyard on September 10 to lay the keel of a tanker. In 2017, he inaugurated the buildingway and transfer dock for medium-sized ships and participated in the keel-laying for four multipurpose ice-class supply ships. The Russian president personally commissioned a module production building in 2016.

The development of SSK Zvezda may increase Russia’s capabilities for naval ship and submarine construction and repair in the Far East. DVZ Zvezda has struggled for years without modernization funding. However, it may be able to leverage the flow of Rosneft investment and Chinese shipbuilding technology, equipment, and experience into SSK Zvezda to improve its own production capabilities. A steady stream of large civilian projects next door may increase of quantity and quality of personnel available to DVZ Zvezda, and moderate the boom or bust cycle of shipbuilding that makes it difficult for Russian workers to stay in the Far East.