ST.PETERSBURG. Oct 7 (Interfax-AVN) - The local Baltiysky Zavod shipyard has refused to work in cooperation with the Severnaya Verf shipyard.
"The board of directors of the Baltiysky Zavod JSO made a decision on October 7 to stop working in cooperation with the Severnaya Verf JSO," Baltiysky Zavod's press service said in a statement.
The company is ready to bear responsibility for non- implementation of signed contracts under Russia's arbitration laws, the statement reads.
A competent source in the Russian Shipbuilding Agency told Interfax-Military News Agency that the board's decision is a result of the ongoing conflicts between the two shipyards over the construction of two Project 956EM destroyers for the Chinese Navy.
Soon after a contract for the destroyers' construction was signed, an interdepartmental commission chaired by Director General of the Russian Shipbuilding Agency Vladimir Pospelov recommended that Baltiysky Zavod implemented the contract. However a decision was made later to build the destroyers at Severnaya Verf, which has already supplied two analogous ships to China.
According to the source, Severnaya Verf is able to implement the contract only in cooperation with Baltiysky Zavod that produces a series of component parts and assemblies for the destroyers. The board's decision effectively means that Baltiysky Zavod will not supply component parts for the vessels.
A contract signed by the Rosoboronexport state-owned arms trade on January 3, 2002, provides for handing the destroyers over to the Chinese Navy in early 2006. According to unofficial data, the value of the contract amounts to USD1.4bn.