Russia to strengthen its power at market of non-nuclear subs

14.09.2010 World Arms Trade Analytic Center (WATAC) has previously mentioned in its analytical forecast that Russia would strengthen its power at world market of non-nuclear submarines by 2014-2015. However, as long as news agency Rosfinkom referring to INFOline published a research that Russia would be pushed out from this market by mentioned time, it seems reasonable to review this issue again.

According to Rosfinkom, "French manufacturers have already built and delivered 4 subs to the orderers (two for Chile and two for Malaysia) and are about to build more 10 subs – four for Brazil and six for India; the latter had traditionally ordered such production in the USSR and Russia. Although aroused numerous claims from Greek Navy, German submarines enjoy even greater popularity. Greece ordered 4 subs (and then refused one); S Korea received 3 subs and builds 6 more; Turkey also ordered 6 submarines; and 2 subs are on trials in Portugal".

Therefore, as for informational agency INFOline, "within the next several years Russia with its 3rd generation subs will be pushed out from the global arms market by foreign 4th generation submarines".

As is known, state trials of Project 677 Lada 4-gen diesel sub St. Petersburg build for Russian Navy by Admiralteyskie Verfi shipyard were held in April 2010. Acceptance act of the project's lead sub was signed on Apr 22. Diesel electric submarine St. Petersburg joined Baltic Fleet in May. Two other Lada class subs – Kronshtadt and Novorossiysk – are under construction at Admiralteyskie Verfi in different levels of completeness.

All basic characteristics of Russian 4-gen non-nuclear submarines are at least equal to western analogs; Russian subs even outclass them in some parameters. On the other hand, export potential of Project 636 Kilo diesel subs by no means has been depleted.

According to information of WATAC, within the next 4 years Russia will increase its share in the world market of non-nuclear subs. Only in 8-year period (2006-2013) the country will sell at least 38 new subs worldwide for $13.87 bln.

In 2006-2009 Russia sold 16 new diesel submarines for $ 4.618 bln. In 2010-2013 there will be substantial growth in deliveries – 22 non-nuclear subs for $9.253 bln. So, in quantitative terms the growth will make 137.5%, in value terms – 200.4%. Germany's market share will decrease and Russia's one will increase, although Germany will keep the top position in general rating.

Considering tenders being currently conducted, 2 diesel submarines will be exported for $600 mln in the period of 2010-2013, if all delivery terms are fulfilled. The great majority of deliveries on presently issued tenders will be executed after 2014.

Currently, Germany holds the top position among exporters of new non-nuclear submarines (20 subs for $7.007 bln) with quite stable backlog of orders: 11 subs for $3.181 bln were exported in 2006-2009, and 9 subs for $3.826 to be exported in 2010-2013.

The second place is held by Russia (9 subs for $3.350 bln). In 2006-2009 there were 2 non-nuclear subs exported for $500 mln, in 2010-2013 sales will substantially grow with 6 new diesel subs for $2.850.

France closes the trio of world leaders (7 subs for $2.914 bln). In 2006-2009 it exported 3 subs for $937 mln, in 2010-2013 it is planned to sell 4 new subs for $1.977 bln.

Rosfinkom listed almost all current orders of Germany and France, including those which deliveries are scheduled after 2014. At the same time, there was no information about Russia's perspective export sales.

Meanwhile, Russia delivered 2 Project 636 Kilo diesel subs to Algeria this year. Late 2009 a $2 bln contract was tied with Vietnam providing delivery of 6 subs of the same project.

Indian Navy issued a tender for 6 new diesel subs. Russia has strong positions in this competition. Considering that building program of 6 Scorpene submarines moves on with great schedule delay and sufficiently extends planned budgets, France unlikely can take success in new tender for granted.

In the long view when the Iran issue is settled, Russia has good chances to continue export of submarines to Tehran.

Most likely, Venezuela will also make a decision to purchase up to 6 Russian diesel subs as a result of long-term talks.

Egypt holds negotiations with Russia about possible procurement of 4 Project 636 Kilo diesel subs for about $1.2 bln. Libya considers a possibility to buy 1-2 Russian-built non-nuclear subs. Syria also intends to purchase two Amur-1650 diesel submarines.

It is not improbable that China signs a contract to buy another six Russian-made subs.

Russia and S Korea are the major candidates to win Indonesia's tender for two diesel submarines.

The list above is by no means full; nonetheless, it is quite enough to state that Russia in the foreseeable future will take leading positions in world market of non-nuclear subs.