• 2023 September 29

    Russia’s ship repair industry in new conditions

    With the western sanctions imposed on Russia the country has faced a serious shortage of ship repair facilities: those of Turkey and China are not enough. The problems in the industry and the ways to solve them were in the focus of the 2nd Ship Repair, Modernization and Components Conference organized by IAA PortNews.

    In brief: Russia needs to expand its ship repair facilities in all major sea basins. Private investors are ready to enter the segment but state support measures should be improved.

    What is needed?

    When speaking at 2nd Ship Repair, Modernization and Components Conference which opened today in Saint-Petersburg, Valery Kireyev, Director of Soyuzproektverf, Deputy General Director of Shipbuilding & Shiprepair Technology Center JSC, said that the shortage of sea transport vessels in Russia is estimated at over 400 units.

    The shortage of sea transport vessels in Russia is estimated at over 400 units.

    He explained that, in 2021, of the 596 of 760 maritime vessels involved in the transport of Russian cargo were flying a foreign flag and were not controlled by domestic shipowners. In 2022, they left the Russian market. To compensate for the loss of tonnage, more than 100 tankers were purchased and RUB 150 billion were allocated for the purchase of 85 vessels, mainly bulkers. However, that did not cover all the needs.

    In particular, 155 ice-class ships are needed for cargo transportation by the Northern Sea Route (NSR).

    According to the expert, shipbuilding complex Zvezda will not cope with the shipbuilding programme alone. Valery Kireyev believes that one of the main projects to solve this problem is the creation of a facility of high-tonnage shipbuilding on the Kotlin Island in Saint Petersburg.

    As for repair of this fleet, it is necessary to create ship repair facilities in Murmansk (State Transport Leasing Company, North-West Fish Industry Consortium), in Petropavlovsk-Kamchatsky (Norebov), Ust-Luga (Rosmorport).


    Valeria Zadonskaya, Project Manager, Investment Projects Directorate, State Transport Leasing Company JSC (GTLK), told the conference participants about the project on construction of a ship repair cluster in the Murmansk Region. According to the speaker, GTLK is currently completing pre-project preparation and financial feasibility study.  The designing works will begin in 2023. The project implementation may consist of up to 4 phases with a gradual expansion of the range of ship repair works and services. The facility is to be fully operational in 2026.

    The market of ship repair covering the units homeported in Murmansk is estimated at RUB 2 billion

    According to earlier statements of Olga Kuznetsova, Deputy Governor of the Murmansk Region, the market of ship repair covering the units homeported in Murmansk is estimated at RUB 2 billion. The maintenance of ships brings only RUB 500 million to the region.


    Another project on creation of a ship repair center is planned for implementation in the port of Ust-Luga. Initiated by FSUE Rosmorport it is to be created at the premises of the support fleet base. As Aleksandr Kazarosyan, Advisor to the Director of Rosmorport’s North-West Basin branch, said at the at 2nd Ship Repair, Modernization and Components Conference, the scope of investments is estimated at RUB 4 billion.

    According to the speaker, the project on creation of the support fleet base initially foresaw the creation workshiops for repairing the company’s ships. However, now it is planned to stablished a full scale ship repair facility able to repair the fleets of other companies.

    According to the calculations, RUB 2.5 billion is needed for the construction of a dock, RUB 0.8 billion – for the construction of buildings, facilities and building sites, RUB 0.7 billion – for the purchase of ship repair equipment and machinery. The company is to become fully operational in 2027.

    The project is to implemented by a joint venture with an investor. The design parameters of the dock are as follows: length — 180 m, height — 33 m, pontoon deck submersion depth — about 9 m. Taking into account the height of pontoons, the total depth of the facility is to make 14-16 m, capacity — 10 thousand tonnes.


    The Far East of Russia lacks ship repair capacity. First of all, not all companies are able to repair large ships. Besides, some yards are engaged exclusively in repair of warships.

    In this context, Far Eastern Shipping Company (the holding company of FESCO) is going to solve the problem of repairing its own fleet with the purchase of a floating dock, Nikolay Chvertko, Director of Far Eastern Shipping Company’s Vladivostok branch said at the conference.

    According to him, the company faced its first difficulties with ship repair during the pandemic when China, where FESCO fleet had been serviced traditionally, introduced tough restrictions because of COVID. The company also used to have its ships repaired in other countries, particularly in Guinea and Sri Lanka, that finally raised questions regarding the quality and cost of the performed works. Besides, sanctions imposed on Russia make it difficult to cooperate with some countries and companies located there.

    The floating dock is to be placed on production facilities of Fesco Service, in the water area of Vladivostok port.

    According to Nikolay Chvertko, the research conducted by Far Eastern Marine Research, Design and Technology Institute showed that it would be possible without any dredging needed.

    He said that the dock of up to 25 thousand tonnes in capacity would allow foe servicing the largest of FESCO’s ships, Fesco Dalnegorsk, Fesco Sofia and Fesco Diomid. There are such docks in China. The initial payback period of the project is estimated at a decade. FESCO plans to repair its own vessels and provide services to third parties.

    As of today, the base of Fesco Service numbers about 100 employees. Following the installation of a floating dock it is planned to expand the staff and purchase additional equipment in order to establish a full-fledged ship repair facility. The company also counts on cooperation with the local educational institutions.

    The dock will have the following characteristics: LOA — 236 m, BOA — 44.5 m, pontoon deck length — 220 m, cranes — 2 units of 20 t each, draft in the submerged state, max — 15 m.

    Northern Sea Route

    As of today, there is no ship repair in the western part of the Northern Sea Route (NSR), this business niche is vacant, Aleksandr Bengert, General Director of Hydrographic Company, said at the conference.

    “The business idea we are discussing with the colleagues is the absence of ship repair (in the NSR waters — ED.)… Here is the niche, enter it,” said Aleksandr Bengert.

    When speaking about the prospects of this activity development, the head of Hydrographic Company reminded that about the construction of Utrenny terminal in the Gulf of Ob over the recent three years – up to 200 vessels of various purposes were involved simultaneously.

    Mustafa Kashka, General Director of Marine Services LLC, said in his turn that mobile ship repair teams should be established for implementing ship repair works along the Northern Sea Route. According to him, it is not necessary to build a ship repair plant in challenging climatic conditions, in Tiksi, for example. Mobile ship repair teams can perform this work.

    Will the state support the industry?

    Sergey Fofanov, General Director of Nefteflot CJSC declared the need to establish an association of ship repair companies in Russia.

    "The ship repair industry should necessarily unite. There are many issues to address. There is a lot of work ahead. It is necessary to solve problems with equipment, personnel, infrastructure, financial support. All this requires increased attention and responsibility. It is necessary to revive the association of ship repair companies or to create it again so that this structure at least protects and helps, and as a maximum - manages the processes of ship repair and is coordination with the federal executive and legislative authorities,” said Sergey Fofanov.

    Speaking about the situation in the domestic ship repair, he noted that Nefteflot CJSC could not use any of the existing measures of state support over the last three years “mainly due to the old funds and the lack of either collateral or free resources to be added to the federal funding. On the other hand – there is no serial approach to ship repair,” he emphasized.

    According to the speaker, the prospects of using the new measure of state support – setting of zero VAT rates raises many questions so far. “Zero VAT is a good goal, but we do not understand how it will be implemented,’ - said Sergei Fofanov.

    The conference participants suggested various mechanisms to support domestic ship repair.

    Valery Kireyev believes that it is reasonable to look into a governmental programme on granting quotas for the extraction of aquatic bioresources in return for creation of ship repair facilities (similar to the keel quotas programme).

    Sergey Smirnov, Director of Arkhangelsk Region’s shipbuilding cluster, said in his turn that preferential leasing mechanisms should be expanded to the projects on construction of floating docks.

    “This should be a long-term programme focused on ship repair companies interested in purchasing docks. Its main parameters should be a low interest rate and a long term of loan, at least 10-15 years,” explained Sergey Smirnov.

    According to Aleksandr Bengert, the return to the state system of norms in the segment of ship repair will contribute to the development of transparent conditions for ship repair services in different regions of the country and will allow shipowners to switch to long-term contracts.

    “Shipowners have started concluding long-term contracts for ship repair and maintenance. The main problem that needs to be solved is the lack of rules of the game in pricing," said Aleksandr Bengert.

    Hydrographic Company is present in several regions including Arkhangelsk, Murmansk and Kaliningrad. There are absolutely different terms and prices in each of them, he said adding that the problem could be solved with the return to the system of norms supported by the state.

    Import substitution

    Local production of ship components and equipment including ship fittings is an important factor in the development of both shipbuilding and ship repair.

    Yevgeny Koptyayev, First Deputy to Director General of Armalit JSC, shared the company’s successful experience in this area.

    Supported by the Ministry of Industry and Trade, Armalit has developed a typical row of ship valves for fishing vessels, which fully meet the needs of domestic shipbuilders in valves and filters made of various materials.

    The use of this valves will allow domestic shipbuilders to receive 85 points under the Decree of the Government of the Russian Federation of 17 July 2015 № 719, and in the future the number of points may be increased. In addition, Armalit is ready to carry out the chief installation work directly at the construction site.

    Along with the pipe valves Armalit presented other promising products (with intelligent control systems of ship’s mechanisms and systems). Such products do not require routine maintenance, feature increased reliability, provide digital interaction with the top-level control system, allow for self-diagnostics and diagnostics of pre-failure state in real time.

    Fishing ships account for 42% of all ships planned for construction by 2035.

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