Zvezda Shipyard Loses Two Major Orders for Atomic Icebreaker

Russia’s Zvezda Shipyard, controlled by state holding company RosNefteGaz, has lost an order for two new atomic icebreakers worth 100 billion rubles ($1.5 billion) this month, Vedomosti reports

Zvezda was pipped to the post by the United Shipbuilding Corporation (USC) as the only other bidder and won the lucrative order, the business newspaper wrote citing an announcement by state atomic energy agency Rosatom

The two ships are the fourth and the fifth atomic icebreakers to be built in the country, and are the most expensive non-military vessels to ever be built in Russia. The ships are scheduled to be ready by 2024 and 2026, with around half of the construction costs being financed by the state budget.  

Zvezda is controlled by RosNefteGaz, a state holding that also holds the government stake in oil major Rosneft and is headed by Russia’s “Oil Tsar” Igor Sechin, who is also the CEO of Rosneft.

As Russia gears up to develop the Arctic maritime Northern Sea Route as well as its burgeoning liquid natural gas (LNG) business that also requires large technically advanced ships for transport, Zvezda has emerged as the largest shipyard in Russia, after RUB202bn of investment and it has been eyeing generous state support.

Sechin has repeatedly used the investment in Zvezda as an excuse to accumulating funds in RosNefteGaz and dodge the Ministry of Finance order that all state-owned enterprises (SOEs) payout 50% of their profits as dividends.

However, according to bne Intellinews, Zvezda is still lagging behind USC in terms of know-how and technology and could not participate in the tender to build the two atomic icebreakers due to insufficient licensing. USC has already built the three other atomic icebreakers Arktika, Sibir and Ural that were launched in 2013, 2015, and 2016, respectively.

Sources told Vedomosti that Zvezda is still poised to build Russia’s largest $16 billion icebreaker, Leader. The state has also agreed to subsidise the construction of 15 LNG tankers for gas major Novatek at Zvezda.