Rosneft, which owns the Zvezda shipyard in Bolshoy Kamen, Primorsky Krai, is in talks to merge its facility with the VTB Bank-operated United Shipbuilding Corporation. The proposed consolidation has received support from Russia’s President, who sees it as a way to enhance industrial efficiency.
According to the RBC news agency, “Rosneft” and VTB are in conversation about the idea of adding the large-tonnage shipbuilding yard “Zvezda” in the Far East, along with the project assets that go with it, to the United Shipbuilding Corporation (USC).
The oil company has already applied to sell the Primorsky Metallurgical Plant, which aims to supply “Zvezda” steel sheets to the shipyard, as well as the Zvezda shipyard. As per RBC sources, these assets are worth 250 billion rubles (about 2.5 billion USD), which is what they are worth in real terms. The report states that Russian President Vladimir Putin’s signature is on the paper that approves the deal.
An RBC source who knows about the details of the negotiations says that the sale could include all the assets. The sale price and other details have not been set yet. They will be in 2025 after the assets have been audited.
Zvezda Ship Complex
The Zvezda shipbuilding complex stands as the sole shipyard in Russia, built entirely from the ground up following the collapse of the Soviet Union. It is in Bolshoy Kamen, which is only 20 kilometers east of Vladivostok. President Vladimir Putin ordered the construction of this cutting-edge company on the site of an old military base in Russia’s Far East in 2009. Ultimately, the goal of the project was to build Russia’s most advanced shipyard, able to build any type of ship. USC and the South Korean Daewoo Shipbuilding & Marine Engineering Co. ran the project at first, but the Korean company left in 2012. Then, a group of companies led by “Rosneft” and Gazprombank bought a 75% stake in the project. USC kept a small stake, which has been slowly decreasing since then. The main client for the project was “Rosneft.” The yard has launched twelve ships so far, and 23 more are currently under construction. The yard has orders for over 50 ships. The order book includes the new icebreaker “Lider” of Project 10510, which has 120 MW shaft power. Rosatom ordered the ship at a cost exceeding 120 billion rubles (about 1.2 billion USD). Its purpose is to ensure the year-round use of the Northern Sea Route, one of Russia’s most significant transport projects.
According to Rusprofile, a counterparty verification and analysis service, Rosneft Vice President Konstantin Laptev heads JSC “Modern Shipbuilding Technologies” which owns 100% of LLC “Shipbuilding Complex “Zvezda.” The current arrangement of shareholders is kept secret. JSC “Rosneftegaz” owned 82.35% of the shares at the end of 2020. JSC “All-Russian Regional Development Bank” owned 13.1%, and LLC “GPB-Industrial Investments” owned 4.55%.
Igor Sechin, the head of Rosneft, said in 2018 that 200 billion rubles (about 2 billion USD) had been invested in “Zvezda.” A choice was made in late 2020 to build a smelting plant. Based on a feasibility study by MCC International Incorporation, Sechin told President Putin that building such a facility in this area is important because the country does not have enough capacity for this type of production. Sukodol Bay, near “Zvezda,” will host the construction of the new plant. It will be able to make 1.5 million tons, with about 330–350 thousand tons going to the shipyard and the rest going to other customers in the region. The value of the plant, which will make steel plates and pipes, is $2.2 billion.
The super-shipyard has hired personnel, including some from USC factories in Northwest Russia. Sergey Tseluiko, who is now in charge of the plant, used to work at the Severnaya Verf in St. Petersburg, for example. RBC sources say that “Zvezda’s” biggest problem is still not having enough workers.
United Shipbuilding
The Russian president signed an order in March 2007 to establish the USC, which aimed to consolidate shipbuilding assets from various private and government-run companies. The USC took over the Admiralty Shipyards in St. Petersburg, which built non-nuclear submarines, military ice-class ships, and big fishing boats. They also took over the Baltic Shipyard, which builds nuclear icebreakers; Severnaya Verf, which makes long-range combat ships; the Sevmash plant in Severodvinsk, which is the biggest nuclear submarine builder in the world; and facilities in Kaliningrad, the Volga region, and the Far East. From 2014 to 2023, Alexei Rakhmanov was in charge of USC. Before that, the Ministry of Industry and Trade directly oversaw it.
USC was given to VTB in August 2023 to manage trust as a government project backed by Vladimir Putin. Some of the reasons given for this move were inadequate management and “financial gaps” in the company.
USC’s previous leadership attempted to recapitalize big shipyards to offset losses, but it was difficult to eliminate all deficits. Most orders are built at a loss, which is covered by subsequent ship series. According to an RBC source who used to work at USC under a different boss, customers wouldn’t sign contracts at prices that would cover the shipyards’ costs, making the problem unfixable.
Andrei Puchkov, who used to be Andrei Kostin’s assistant chairman and now runs VTB, took over USC in August 2023. Throughout the year, numerous shipyards replaced their leaders with new ones. After doing an audit of its assets, the company worked on optimization and cutting costs. VTB showed a plan for a new large-tonnage shipyard in Vladivostok in September at the Vladivostok Economic Forum 2024. The purpose of this shipyard is to build cargo ships. USC plans to construct this shipyard across from “Zvezda” on the opposite side of Ussuri Bay. VTB picked the spot because it has a mild climate and is close to Russia’s main Asian partners, mostly China. Andrei Kostin said at the meeting that USC will have a deficit of 1.029 trillion rubles (about 10.29 billion USD) until 2030. He also said that the institution would need another 1 trillion rubles (about 10 billion USD) to build the new plant and improve shipyards in the Northwest.
An RBC source close to the Ministry of Industry and Trade does not rule out that Rosneft’s potential sale of “Zvezda” might delay the timeline for establishing a new shipyard in Vladivostok due to the industry’s overall labor shortage. VTB will need to sort out its new asset in Bolshoy Kamen first.