The 4th Military and Naval Show in Saint-Petersburg: Interview with the Director of OPK’s Shipbuilding Project Andrei Fomichev

IZVESTIA, Russia -

- Russia Develops Highly Competitive Military Goods Keeping With The XXI Century Standards

The 4th Military and Naval Show became a showcase for the achievements of Russian shipbuilders and designers and proved that 2007 and 2008 were landmark years for the Russian Navy. The most important participant of the show was the United Industrial Corporation (OPK), which embraces the largest shipbuilding factories Severnaya Verf (Northern Shipyard), Baltiysky Zavod and Iceberg design Bureau. But the real star of the show was the OPK-built corvette Steregushchy, designated as Project 20380. In 2008 the corvette joined the Russian Navy. Izvestia correspondent Artem Ostrovsky discussed the importance of this event for the domestic navy and the prospects of military shipbuilding with the Director of OPK’s Shipbuilding Project Andrei Fomichev.

Question: Andrei Borisovich, what makes Steregushchy unique?

Answer: First of all, Project 20380, of which Steregushchy is a part, is not a rehash of old Soviet design. The project has been developed practically from scratch by the Almaz Central Marine Design bureau in the post-Soviet Russia. During the design stage 21 inventions were patented and 14 certificates issued for registration of computer programs. The corvette employs stealth technology which makes it invisible to enemy detectors. Highly automated operation and firing systems require fewer crew members to operate them. And last but not least, Steregushchy is equipped with up-to-date weapons, Russian made. The weapons, including a deck-pad helicopter, allow the corvette to destroy surface, subsurface, air and shore-based targets, fight as a combined team or on its own, including fighting even heavier ships.

Question: Are you planning further construction?

Answer: Of course, Steregushchy is not the only ship of its kind. It is a lead ship of a series of corvettes designated Project 20380. The OPK yard has a government commission to expand the series with the Storozhevoy, Soobrazitelny, Boiky and Stoiky corvettes. Three ships out of the four are already in various stages of construction.

Admiral Vladimir S. Vysotsky, head of the Russian Navy, has said that Steregushchy-type corvettes will form the basis of the Russian Navy until 2030. According to the management’s estimations the Navy will need several dozens of new corvettes. In other words the transfer of Steregushchy to the customer marked not just the start of production of surface vessels in the new Russia, it marked large-scale production.

Question: Does the corvette compare favorably with its foreign peers?

Answer: Steregushchy is unique not only for the Russian Navy, as far as its technical and combating qualities go. Project 20380 comprising newly built ships is known abroad as project 20382 Tiger and caused excitement among foreign customers. Foreign experts estimate that on the global weapons market Project 20382 ships will have no competitors in their class in the foreseeable future. Therefore the export potential of Tiger corvettes is very high, estimated between twenty to thirty billion dollars.

Question: Does this mean that Russia will have a competitive edge on the global weapons market?

Answer: Absolutely. Until recently, under cooperation programs in the military and technical area, Russia has been supplying abroad mostly reworked USSR-developed weapons. Russia’s foreign competitors reckoned that in the following decade the modernization potential would run out. In that case, they believed, Russia would start to lose cooperation partners and slowly withdraw from the weapons market. The development of Steregushchy and its export version means that the Russian Federation is beginning to possess highly competitive military goods for foreign customers up to the standards of the XXI century. They will not only preserve Russia’s current stance on the weapons market but will most likely expand the country’s role in the global military and technical cooperation.

Question: Is OPK developing other areas within the confines of military shipbuilding?

Answer: OPK enterprises are the leaders of the military and industrial complex, accounting for 75 % of the surface ships construction program. In the last year apart from Steregushchy OPK gave the Russian Navy three new ships. In 2008 the Federal Service for Defense Contracts (the Rosoboronzakaz) approved the Severnaya Verf’s (part of OPK) status as the only Project 20380 corvette and Project 21270 motor boat supplier. Today this is the only enterprise to have been included in the register of the exclusive suppliers of Russian weapons and military equipment. Besides, OPK’s shipyards have been accepted by the Federal Industry Agency and Rosoboronexport as a prospective contractor under a number of orders and agreements with different countries comprising 10 different areas of military and technical cooperation.

The yards of OPK are in the process of construction of the ocean frigate “Admiral Flota Sovetskogo Soyuza Gorshkov” for the Navy, designated as Project 22350, as well as a lead communications ship and a special purpose motor boat. We are also developing military and technical cooperation. Several vessels are being modernized for the Algeria Navy. At the recent Military and Naval Show in Saint-Petersburg Vladimir Vysotskiy announced the government’s intention to have another frigate built by the OPK shipyards.

Question: Such large-scale prospects will certainly require upgrading and expanding the capacity of the yards…

Answer: According to experts’ estimates, Russia needs approximately seventy surface vessels for offshore maritime zone. OPK’s yards already have enough capacity to increase the scale of the state defense contracts program threefold. Nevertheless OPK has started large-scale modernization and expansion of capacity. OPK’s strategic aim is to create an advanced, internationally competitive compact shipyard, capable of producing the entire line of large-capacity vessels with a deadweight of up to 300,000 tons and military vessels of virtually every class. As regards civil shipbuilding the united yards specialize in the construction of high-technology, technically advanced ships for exploration, extraction and transportation of raw hydrocarbons from oil and gas fields developed on the continental shelves. Moreover, OPK-built military ships can also be used to complete the shelf projects: the Naval Doctrine of the Russian Federation makes the Navy directly responsible for the protection of the inshore area, including the vast Russian shelf territory.

Questions: It is evident the OPK enterprises don’t have a shortage of orders. But according to recent information Severnaya Verf ended in the red in 2008. How can you account for that?

Answer: The losses shown in the accounting statements of the factory are technical and attributable to the restatement of foreign currency liabilities, namely loans from Russian banks. This was due to the sharp Ruble decline against the Dollar and the Euro. Severnaya Verf is obtaining foreign currency loans to finance its export contracts and the repayment of the loans will be effected out of the foreign currency revenue. However the expected proceeds are not recognized in the accounting statements and not restated. This is why the growth of the dollar and the Euro results in loss recognition.

Question: What are the prospects of financing the state defense orders given the current economic situation?

Answer: The Deputy Prime Minister Sergei Borisovich Ivanov, directly addressed this issue at the recent show. According to his words the Russian corvette and frigate construction program is under way and will be funded fully and without delay.

About OPK

United Industrial Corporation (OPK) is a diversified holding company with total value of assets of more than US$13 billion. OPK develops and manages an investment portfolio in major sectors of the Russian economy, including the financial sector, real estate development, shipbuilding, mining and media. For more information please visit the OPK website eng.opk.ru/

Source: OPK

Press contact: Ogilvy Public Relations, E-mail: opk at ogilvy.com