Tuesday, 25 September 2012

Algeria looking to procure two additional Improved Kilo Project 636M Diesel Submarines from Russia

Algeria may order two additional diesel electric submarines of project 636M considered one of the best selling products of the Russian defense industry from Russia. A source in the Russian Defense Ministry reported that Rosoboronexport received an application from Algeria for purchase of two diesel electric submarines of project 636M (Kilo according to NATO classification).

A source close to the special exporter of Russian armament confirmed this. According to one of the sources, in August the Ministry of Industry and Trade chose Admiralty Shipyards (a part of USC) as contractor for the order according to proposal of the Federal Service for Military Technological Cooperation. The source explained, "The decision of Algeria to buy additional submarines from Russia is evidently connected with growth of tension in the region with regard to events of the "Arab spring." The source explained that the contractor for the order was chosen "in accordance with wishes of the customer country." In 2020, Admiralty Shipyards supplied two submarines of project 636 to Algeria in the framework of fulfillment of the contract of 2006 (its value amounted to about $600 million). The sources did not disclose the value of the new contract. Kilo class submarine was designed by central maritime design bureau Rubin. It is considered one of the most silent diesel submarine in the world. Its length amounts to 73.8 meters, width amounts to 9.9 meters and displacement amounts to 2,350 cubic meters. Underwater speed amounts to 20 knots, the maximal submersion depth amounts to 300 meters. The crew consists of 52 people. The submarine is armed with four missiles (the quantity may be increased), 18 torpedoes and 24 mines.

Project 636 represents a modernized submarine of project 877EKM Varshavyanka supplied to seven countries including Algeria between the 1980s and 1990s. Two submarines of project 877EK were built for Algeria at Admiralty Shipyards in the 1980s. In 2005, Admiralty Shipyards together with Rubin design bureau signed a contract on repair of these two submarines and in 2006 Algeria decided to buy two new submarines. Thus, in case of signing of a new contract the navy of Algeria will have six submarines made in Russia.

One of the sources says that signing of a firm contract is expected in 2013. A source close to Rosoboronexport does not rule out that its signing may be postponed because of disputes about the candidacy of the contractor. The source adds, "USC is currently struggling for revision of the resolution of the Ministry of Industry and Trade. The corporation counts on reception of the status of the only supplier of submarines of project 636 in the framework of the Algerian contract and to use Admiralty Shipyard for its fulfillment." Earlier, USC tried to achieve granting of a status of a subject of military technological cooperation with a right of "foreign trade activity related to military products."

Representatives of USC could not answer the question if this practice would be applicable to other export contracts. Press secretary of the corporation Alexei Kravchenko refused to comment. A source in the shipbuilding industry presumed that this entire store could be connected with plans of USC "to build internal cooperation."

Sergei Karabaev, managing partner of lawyer bureau Karabaev and Partners, presumes that USC has good changes to receive status of contractor for the export order. Karabaev adds, "There is a legal loophole: it is sufficient for USC to obtain a license of Rosoboronzakaz that says that the corporation is producer of military products. Then USC will be able to hire Admiralty Shipyards for fulfillment of the export order in the framework of cooperation." However, in this case USC will have either to buy or to rent production facilities because this is one of the terms for issue of a license. The expert concludes that air defense corporation Almaz-Antey has been working on the market of military technological cooperation in this way for many years.

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