Plans and Requirements of Fleet Replenishment Around the Federal Objectives of the Developing of North Regions (5)

Mikhail V.Voyloshnikov, Dr. Sci.(engineering), titular professor, CIMarE

PLANS AND REQUIREMENTS OF FLEET REPLENISHMENT AROUND THE FEDERAL OBJECTIVES OF THE DEVELOPING OF NORTH REGIONS (5)

The prospects for shipbuilding in Russia and demand, which for should be oriented scientists and practical developers of professions: Shipbuilding and Marine engineering are originally founded on two major independent factors: on the decisions of the Federal goals and on the objectives to meet market demand

As the market demand marine commercial vessels which for are being build in series, has an international character, the prospects for the shipbuilding industry in Russia are typical features of the problem to be solved for Government of Russia

The Federal tasks of shipbuilding development decisions which in are involved both Russian and foreign specialists can form be described in the most general by Russian Strategy of development of shipbuilding industry for the period up to 2020 and for the perspective approved by the Order # 354 on September 6, 2007 of Russian Ministry of Industry and Energetic

(6) On the basis of the Strategy one can determine what tasks are needed for Government of Russia and are open for participation of scientists and are of great interest to them

In the Strategy requires the involvement of scientists and practical developers of professions: Shipbuilding and Marine engineering on two main areas: on the creation of new types of ships required for the Federal Government but not mastered sufficiently in the acting shipyards, which supply ships of serial projects in accordance with market demand on the creation of modern shipbuilding plants and yards capable to unite the acting shipyards to work together on the construction of new types of ships, as well as for the development of the mass shipbuilding aimed at the market demand

The characteristics of these two areas covered by the Strategy, and particularly their implementation are reviewed in more detail in the proceeding

CONTENTS

(2) THE SUBJECT AND THE PRELIIMINARY ASSUMPPTIONS OF THE STRATEGY

ICE NAVIGATION LNG–TANKERS FOR FEDERAL STRATEGY DEMAND

THE ICEBREAKERS NEW CONSTRUCTED AND PLANNED FOR CONSTRUCTION

PROJECT OF ICE NAVIGATION CONTAINER SHIP FOR STRATEGY

OFFSHORE PLATFORMS AND EQUIPMENT TO WORK ON THE ARCTIC OFFSHORE

ARCTIC NAVIGATION SCIENTIFIC SHIP «AKADEMIK TRESHNIKOV» FOR RUSSIAN STRATEGY OF SHIPBUILDING IMPLEMENTING

CHINESSE ARCTIC NAVIGATION SCIENTIFIC SHIPS

FLOATING ENGINEERING FOR POWER GENERATION «AKADEMIK LOMONOSOV» FOR RUSSIAN STRATEGY OF SHIPBUILDING

THE FLOATING PLANTS (FPSO, FPU, FLNG) FOR THE PROCESSING OF GAS IN ARCTIC

THE GENERAL VERSIONS OF IMPLEMENTING OF THE STRATEGY

THE CORRELATION OF THE STRATEGY AND THE MARKET DEMAND IN SHIPBUILDING

PROBABLE MISTTAKES THAT MAY OCCUR IN THE PROCESS OF THE IMPLEMENTING OF THE STRATEGY

THE SOCIAL IMPLICATIONS OF INVESTING IN THE CONSTRUCTION OF VESSELS FOR FEDERAL NEEDS

THE CONCEPTUAL PECULIARITIES OF SHIPBUILDING DEVELOPMENT STRATEGIES IN RUSSIA AND IN THE OTHER COUNTRIES

THE TECHNOLOGICAL FEATURES OF SERIAL SHIP CONSTRUCTION IN THOSE COUNTRIES WHICH OCCUPY THE FOREFRONT OF THE INDUSTRY

THE GENERAL TECHNOLOGY OF SERIAL SHIP CONSTRUCTION WITH THE UNITY AS THE TECHNOLOGICAL COMPLEX OF AVAILABLE SHIPYARDS AFTER THEIR CONVERSION

(3) THE POSSIBILITIES OF THE INTERNATIONAL COOPERATION IN SHIPS BATCH CONSTRUCTION OF MODULES

SHIPBUILDING INDUSTRY TERRITORIAL STRUCTURIZATION AND THE CREATION OF NEW SPECIALIZED SHIPYARDS

THE NECESSETY OF THE AUTOMATION OF THE SHIP COMPARTMENTS CONSTRUCTION IN THE RUSSIAN ACTING SHIPYARDS

THE TERRITORIAL DIFFERENCE OF THE USUAL SHIP CONSTRUCTION TECHNOLOGY IN RUSSIAN YARDS AND ABROAD

THE EXPERIENCE OF NEW INDUSTRIAL COMPLEXES PLANNING SUITABLE FOR THE SHIPYARDS CREATING IN RUSSIA

THE SCHEMATIC ILLUSTRATIONS OF THE SPECIALIZED SHIPYARD FOR SHIP ASSEMBLING

THE INVESTMENTS IN SHIPBUILDING IN FAR EAST OF RUSSIA

THE FEDERAL DECISIONS AND PROJECTS FOR ASSISTANCE OF RUSSIAN SHIPBUILDING DEVELOPMENT STRATEGY IMPLEMENTING

THE DECISIONS OF THE AUTHORITYES OF THE DEVELOPMENT OF SHIPBUILDING IN FAR EASTERN REGION OF RUSSIA

RUSSIAN FEDERAL LAW OF NOVEMBER 7, 2011 # 305– FZ «OF THE SHIPBUILDING DEVELOPMENT SUPPORT …»

THE INVESTMENTS GUIDLINE PRESENT VALUES OF PROSPECTIVE PERIODS TOTAL IN THE SHIPBUILDING DEVELOPMENT IN RUSSIA PACIFIC REGION

THE PARTICIPANTS OF THE STRATEGY IMPLEMENTING THE OPTIONS OF THE INVESTMENTS CONSOLIDATION

(4) THE POSSESSING OF JOINT PROPERY RIGHTS IN THE SHIPYARDS 2

SHIPS FOR THE MARKET DEMAND WOULD REASONABLE TO BE THE MAIN PRODUCTION FINALLY WITH THE PARALLEL CONSTRUCTION OF THE SHIPS FOR THE NEEDS OF THE GOVERNMENT

THE EXPERTIZE OF THE WAYS OF THE SHIPBUILDING DEVELOPMENT STRATEGY IMPLEMENTATION

THE SOURCES AND THE AIMS OF THE STRAREGY FINANCING

THE INVESTMENTS IN SHIPYARDS DIRECTLY ISSUED BY GOVERNMENT OF RUSSIA AND THE COMMERCIAL INVESTORS COULD AND WOULD REPAY FOR THE REDEMPTION

THE MOST GENERAL CHARACTERISTIC OF THE OBJECT OF INVESTMENTS

THE DEMAND OF VOCATIONAL TRAINING AND REPLENISHMENT IN THE SHIPYARDS OF EMPLOYEES OF ALL CATEGORIES

CREATING OF PROFESSIONAL ENVIRONMENT OF THE NAVAL ARCHITECTURE, SHIP CONSTRUCTION AND MARINE ENGINEERING

THE RECOMMENDED TRAINING CURRICULUM FOR TEACHING IN THE UNIVERSITY OF NAVAL ARCHITECTURE, SHIP CONSTRUCTION AND MARINE ENGINEERING

THE STRUCTURISATION OF THE TRAINING CURRICULUM FOCUSING ON THE CORE PROGRAMS AND ON THE FINAL PROGRAM

C O N C L U S I O N S

THE SUBJECT AND THE PRELIIMINARY ASSUMPPTIONS OF THE STRATEGY

(7) Under the Strategy the ships of following classes for the Federal needs are required: ice navigation tankers and LNG–tankers; icebreakers; container ships of ice navigation; offshore platforms and equipment to work on the Arctic shelf; research vessels suitable for navigate in the Arctic; the marine engineering for power generation in coastal areas, including from renewable sources (tides, currents, wind); the floating equipment for the processing of gas in Arctic.

The Strategy noted the need for specialized cargo ships for navigation in Arctic is about 90 units with a total deadweight of about 4 million tones and maintenance of the fleet of about 140 units, it is required as well from 10 to 12 new icebreakers.

(8) The requirements of «Gazprom» Public Joint Stock Company for all regions operation including Arctic region counting for twenty years are more than 350 of ships of various classes and marine technical complexes, totaling over 100 bln. US dollars: 55 drilling platforms at a cost of 42,9 bln. US dollars 58 tankers (total value of 9,45 bln. US dollars) 46 icebreakers (4,04 bln. US dollars) 93 of supply ships 39 of scientific ships 17 of LNG carriers worth up to 200 mil. US dollars for one unit in the long run an additional 40 units of LNG tankers.

The samples of Russian Strategy of development of shipbuilding industry implementing:

ICE NAVIGATION LNG–TANKERS FOR FEDERAL STRATEGY DEMAND

(9) Sample of new Arctic LNG–carrier for Russian Strategy of shipbuilding http://www.marinelog.com/index.php?option=com_k2&view=itemlist&task=tag&tag=icebreaking

Ships are being build at the South Korea's Daewoo Shipbuilding and Marine Engineering (DSME) The 17,200 cu.m LNG carriers of Yamal LNG project is 299 m long, 50 m beam, RMS with Arctic class ARC 7

Ship is able to break solid ice up to 2.1 m thick.

The Wärtsilä machinery is capable of operating on liquefied natural gas (LNG), heavy fuel oil (HFO), or low– viscosity marine diesel oil (MDO) but LNG will be the main type of fuel to be used. Wärtsilä will supply 12– cylinder and 9– cylinder Wärtsilä 50DF dual– fuel engines. The total output from the Wärtsilä engines is 64,350 kW per vessel

4 (10) Sample of new Arctic LNG–carrier for Russian Strategy of shipbuilding http://barentsobserver.com/ru/energiya/novyy– spg– tanker– ledovogo– klassa– 08– 11

LNG project «Velikij Novgorod», ice class Ice2 (1С). Customer of the construction Public joint stock company Sovcomflot (SCF)

(11) Conceptual project of Aker Yards of new DA–class Arctic LNG–carrier for the Strategy http://lngas.ru/transportation– lng/texnologii– transportirovki– spg– arktika.html

The concept of the Arctic LNG carrier of the capacity of 200 th. cub. meters for the Kara Sea

Originally the main engine power is 53 MW, it is more than of majority icebreakers of Northern Sea Route (that is usually between 16 – 57 MW)

The cost of the first ship is around 300 – 350 mil. US dollars

Now the project capacity of the power plant reduces from to 40 MW (two independent double fuel internal combusting engines)

Ship is able to break solid ice up to 2.5 m thick astern.

The DA class, – ice–class vessels, which bow shapes are optimal for navigation in clear water and the aft shapes can effectively crack the ice

5 (12) Conceptual project of new Arctic LNG–carriers line for Russian Strategy of shipbuilding http://www.nt– magazine.ru/nt/ship/gazovoz

Designing bureau «Severnoe PKB», JSC The conceptual projects of new Arctic LNG–carriers line of various tonnage: 80000 cub. m of LNG, 155000 cub. m and 215000 cub. m

(13) Sample of new–built Arctic tanker for Russian Strategy of shipbuilding http://izvestia.ru/news/508231 Ship is able to break solid ice up to 1,5 m thick astern

The Arctic tanker «Enisej» «GMK «Noril'skij nikel'», JSC; Nordic Yards in Vismar, 2011

Length – 169 m, beam – 23.1 m, effective power of the main engines – 13 000 kW, deadweight – 15 000 ton at winter draught 9.0 m; 20 000 ton at summer draught 10.0 m

6 THE ICEBREAKERS NEW CONSTRUCTED AND PLANNED FOR CONSTRUCTION

(14) The icebreakers in the world, the approximate number, general rewiew is in the Table http://www.uscg.mil/hq/cg5/cg552/ice.asp Table

USA ublic Chile Japan

country China Latvia Russia Canada Estonia Finland Sweden Norway Australia Denmark Germany Argentina South Africa Korea Rep

Icebreakers 34 7 8 6 5 4 1 1 1 1 1 1 1 1 1 1 1 Total Planned 9 1 1 1 1 1 construction Under 4 construction

(15) Project of new nuclear–powered icebreaker for Russian Strategy of shipbuilding

7 (16) http://sdelanounas.ru/blogs/61334/

The universal nuclear–powered double–draught icebreakers of the project 22220 (LK– 60Ja) Project is developed at Design bureau «Ajsberg», JSC Are under construction in St.–Petersberg at «Baltijskij zavod – Sudostroenie», Ltd.

Contract # 05706 – keel laid 05.11.13 – «Arktika» Contract # 05707 – construction works began – «Sibir'» Contract # 05708 – Contract is signed – «Ural»

Displacement: 25540/33540 t (for double–draught) length – 160 m (maximal length 173.3 м); beam – 33 m (maximal beam 34 м) draught – 8.55/10.5 m; maximal running velocity: 22 knots; power of main engines: 60 MW

Ship is able to break solid ice up to 2.8 m thick

(17) Project of new icebreaker for Russian Strategy of shipbuilding

Disel–electrical icebreaker of the project 22600 (LK– 25) The project is developed at Design bureau «Petrobalt».

Ship is under construction in St.–Petersberg at «Baltijskij zavod – Sudostroenie», Ltd.. Contract # 05620 – keel laid 10.10.12 – «Viktor Chernomyrdin»

Displacement: 22258 ton; sizes: length – 146.8 m, beam – 29 m, draught – 9.5 м Maximal running velocity: 17 knots; power of main engines: 25 MW

Ship is able to break solid ice up to 2.0 m thick

8 (18) New icebreakers for Russian Strategy of shipbuilding, ships of project LK-16

http://sdelanounas.ru/blogs/61334/

The project 21900 is developed at Design bureau «Baltsudoproekt»

Ships were constructed in St.–Petersberg at «Baltijskij zavod», JSC Contract # 601 – launched 25.05.07 – delivered 11.12.08 – «Moscow» Contract # 602 – launched 28.05.08 – delivered 02.11.09 – «St.–Petersberg»

Displacement: 14300 ton; sizes: length – 114 m, beam – 28 m, draught – 8.5 м Maximal running velocity: 16 knots; power of main engines: 16 MW

(19) Project of new icebreaker for Russian Strategy of shipbuilding

9 (20) http://www.rosmorport.ru/img/16477_lk25%20– %204.JPG

Icebreaker LK– 25, project 22600М Project is developed at Design bureau «Baltsudoproekt»

Are under construction in «Vyborgskij sudostroitel'nyj zavod» shipyard and «Arctech Helsinki Shipyard» Contract # 230 – keel laid 17.10.12 – launched 29.04.14 – «Vladivostok» Contract # 231 – keel laid 12.12.12 – «Novorossijsk» Contract # 509 – keel laid 26.12.12 – launched 25.03.15 – «Murmansk»

Displacement: 14000 ton. Sizes: length – 119.4 m, beam – 27.5 m, draught – 8.5 m. Maximal running velocity: 17 knots. Power of main engines: 17.4 MW

Ship is able to break solid ice up to 1.5 m thick (21) Project of new icebreaker for Russian Strategy of shipbuilding

http://sdelanounas.ru/blogs/61334/

Disel–electrical icebreaker обеспечения of the project 21180 The project is developed at «KB «Vympel», JSC

Ship is under construction in St.–Petersberg in the «Admiraltejskie verfi», JSC Contract # 02470 – keel laid 23.04.15 – «Il'ya Muromec»

Displacement: 6000 ton; sizes: length – 85 m, beam – 19.2 m, draught – 6.6 m. Maximal running velocity: 15 knots; power of main engines: 8 MW

Ship is able to break solid ice up to 1.0 m thick

10 (22) Non–symmetrical shape icebreaker «Vladislav Strizhov» for Russian Strategy of shipbuilding

http://sdelanounas.ru/blogs/61334/

Disel–electrical icebreaker with an asymmetrical hull shape of the project R– 70202 Project was develop in «Aker Arctic Technology» (Finland).

Ship has been constructed at «Pribaltijskij sudostroitel'nyj zavod «YAntar'», JSC and at «Arctech Helsinki Shipyard» Contract # 508 – delivered 30.12.14

Displacement: 4350 ton Sizes: length – 76.4 m, beam – 20.5 m, draught – 6.3 m Maximal running velocity: 14 knots; running velocity solid ice up to 1.0 m thick: 3 knots Power of main engines: 7.5 MW (23) «Aker Arctic Technology» project of new diesel-electric icebreaker for Russian Strategy of shipbuilding

Icebreakers of the project of «Aker Arctic Technology» (Finland) # 130A The Contract is signed for ship construction at «Vyborgskij sudostroitel'nyj zavod», JSC

Sizes: length – 110 m, beam – 24 m, draught – 8 m Maximal running velocity: 16 knots; running velocity 6 knots in solid ice of 1.2 m thickness Power of main engines: 22 MW

Ship is able to break solid ice up to 2.0 m thick

11 (24) New ice navigation supply ship for Russian Strategy of shipbuilding

http://sdelanounas.ru/blogs/61334/

Multifunctional ice-class supply ships of the project R– 70201 Project of «Aker Arctic Technology» (Finland)

Constructed at «Vyborgskij sudostroitel'nyj zavod», JSC and at «Arctech Helsinki Shipyard» Contract # 506 – delivered 21.12.12 – «Vitus Bering» Contract # 507 – delivered 19.04.13 – «Aleksej CHirikov»

Displacement: 10700 ton. Sizes: length – 99.9 m, beam – 22 m, draught – 7.9 m Maximal running velocity: 16 knots; power of main engines: 13 MW

Ship is able to break solid ice up to 1.7 m thick

PROJECT OF ICE NAVIGATION CONTAINER SHIP FOR STRATEGY

(25)

http://www.proatom.ru/modules.php?name=News&file=article&sid=1658

Container ship of container capacity of 2500 TEU for Northern Sea Route The Arctic category Arc7 (RMRS)

Length 252 m, beam 32.2 m, draught 11.5 m, deadweight 51000 ton Maximal running velocity: 21.0 knots, power of main engines: 32 MW

Ship is able to break solid ice up to 2.0 m thick

Construction cost of about 143 mil. US dollars

12 OFFSHORE PLATFORMS AND EQUIPMENT TO WORK ON THE ARCTIC OFFSHORE

(26) Sample of the offshore ice–resistant platform for Russian Strategy of shipbuilding

Personnel 200 people, mass empty 117 th. ton, mass ballasted 506 th. ton Height general 141 m, height of the caisson 24.3 m The width caisson in the bottom 126 × 126 m, width caisson in the deck 102 × 102 m Oil tanks capacity 12 items (total 113 th. cub. m) Oil extraction annual (after 2020, maximal) 5 mil. ton

13 (27) The offshore fields of natural gas in East Arctic

Yamal Peninsula natural gas fields, coast of the Yamal peninsula, the Kara Sea The Shtokman field on the shelf of the Barents Sea

ARCTIC NAVIGATION SCIENTIFIC SHIP «AKADEMIK TRESHNIKOV» FOR RUSSIAN STRATEGY OF SHIPBUILDING IMPLEMENTING

(28)

http://49ans.ru/polus/arctos/fedorov–treshnikov

Ship is launched at 2011 in «Admiraltejskie verfi», JSC (St.–Petersberg)

(29)

http://ria.ru/arctic/20120222/572335035.html

Length 133.6 m, beam 23.0 m, maximal running velocity: 16 knots

The main engines Wartsila 2 × 6300 kW, 1 × 4200 kW Propulsion motor 2 × 7100 kW

Running velocity 2 knots in solid ice of 1,1 m thickness

CHINESSE ARCTIC NAVIGATION SCIENTIFIC SHIPS

(30) (Sample of ship corresponding goals for Russian Strategy of shipbuilding)

Chinese new ice–navigation scientific ship «Xue Long» sample

http://moremhod.info/index.php/library– menu/16– morskaya– tematika/201– flot?showall=&start=3

Ship is constructed in 1993 at the Kherson shipyard in Ukraine deadweight – 10,225 ton, length – 167 m, beam – 22.6 m, draught – 9 m the main engines power – 13,200 kW; maximal velocity – 18 knots Class – CCS B1

(31) Same project ship in Russia «Vasilij Golovnin», ship owner FESCO, Vladivostok

15 (32) The new Chinese concept of polar research ship, Polar Research Institute of China

(Sample of ship project corresponding goals for Russian Strategy of shipbuilding)

http://akerarctic.fi/en/references/concept/chinese– polar– research– vessel

FLOATING ENGINEERING FOR POWER GENERATION «AKADEMIK LOMONOSOV» FOR RUSSIAN STRATEGY OF SHIPBUILDING

(33)

16 (34) Assignment: electrical power generation, water heating, sea water desalination in Arctic seas

Equipped two nuclear energy settlements 2 × KLT–40С Eelectrical power – 2 × 35 MW; heating power – 140 gCal / hour Desalination capacity from 40 to 240 cub. m of fresh water a day Length– 144 m, beam – 30 m; displacement – 21500 ton

The completion of the construction is scheduled at 2018 in St.–Petersberg at «Baltijskij zavod», JSC

THE FLOATING PLANTS (FPSO, FPU, FLNG) FOR THE PROCESSING OF GAS IN ARCTIC

(35) These classes of ships are of the Strategy demand There are many FPSOs, FPUs and FLNGs operated, constructed and designed today But there is the lack of these classes for Arctic operation

We would account that these ships are not of very usual structures and features And as the scientists we have many interests for the floating platforms theory and mechanics research, especially the platforms intended to use in Arctic

The best results in construction of these vessels probably have the shipyards in Korea Republic The following illustrations sample us the great achievements in the concepts

The equipment for processing of gas is builded in Korea Republic, Samsung Heavy Industries

(Sample ship «Prelude», floating plant processing LNG, corresponding goals for Strategy of shipbuilding)

FLNG – Floating Liquid Natural Gas vessel

17 (36) http://nlo–mir.ru/tech/28986–samyj–bolshoj–korabl–v–mire–6–foto.html

The biggest in the world ship «Prelude» is in possession of Shell Launched in the last year in Korea Republic, Samsung Heavy Industries

Operation is planned in Indian ocean around West Australia

Length 488 m, total displacement with LNG cargo 600 th. ton The capacity is enough for annual liquefaction of around 3,9 mil. ton of LNG

(37) The floating plant «Lavaca Bay» for processing of LNG is being built in USA, Excelerate Energy

(Sample of processing of gas floating plant ship «Prelude» welcome for Russian Strategy of shipbuilding)

http://www.lngworldnews.com/excelerate–completes–lavaca–bay–lng–feed–usa/

Natural gas liquefaction technology on a vessel 338 meters long and 62 meters wide

Excelerate FLNG would typically include: – Integrated gas processing plant – Liquefaction units with a capacity of 3 million t/y of LNG – Storage capacities of 250,000 cubic meters

Lavaca Bay LNG facility will cost 2.4 billion US dollars

18 THE GENERAL VERSIONS OF IMPLEMENTING OF THE STRATEGY

(38) If you do not talk about the details of the Strategy, you could see three core versions of Federal funding in the development of the fleet or the shipbuilding industry (the versions are interrelated but not identical) :

1. Construction the ships of chosen classes and projects in the shipyards in Russia for Federal needs

2. Construction of ships for the needs of the Government in the shipyards outside of Russia, for example, in the shipyards in Korea Republic, Japan, Taiwan or in China, which would be selected on the basis of the economic analysis with the purpose to save costs of taxpayers or the another Federal costs

3. Investing not directly in the construction of ships, and in the conversion of shipbuilding facilities in Russia for creation of new the jobs in Russia, and in the development of modern shipbuilding mass technology, which can be used then for the construction of vessels for Federal needs

The first and second versions do not imply development of shipbuilding industry but there is in the first variant the certain profit that can be spent on shipyards facilities improvement

Essentially, there are two possible alternatives: investing in the construction of ships (versions 1 and 2), and spending in the conversion of available shipyards (version 3) to improve serial ship construction technique and to create new jobs in Russia

THE CORRELATION OF THE STRATEGY AND THE MARKET DEMAND IN SHIPBUILDING

(39) It is clear that the creation of the classes of ships to be built in accordance with the Strategy, does not promises the refund to Federal budget of Russia, because ships of these classes do not aimed to bring income, and the ships require further costs of Government to maintain in good working condition and for their operation

For Government of Russia is cheaper to build the ships in shipyards abroad, such as in Korea Republic, Japan, Taiwan or in China, which in is very good developed ship mass construction, And it corresponds with the second version of investing of Federal funds of Russia in the fleet renewal and definitely not in the shipbuilding industry renewal

The ability to place the orders for construction of ships for the Federal needs in to Korea Republic or in China, for example, could be considered preferable of an economic point of view, than the construction of ships in Russia if without the shipyards renovation

In addition to the demand in respect of the ships for Russian Strategy of shipbuilding, which serves as the first reason for the development of innovative shipbuilding, the second major motivator for the development of shipbuilding industry is market demand regarding different classes of the batch constructed ships, especially the transport and fishing ships, as well: the ocean and inland waterways high-speed vessels, the mechanical equipment for many types of ships the marine engines, the electromechanical equipment of ships the equipment of automation of diesel-electrical engineering, etc.

19 PROBABLE MISTTAKES THAT MAY OCCUR IN THE PROCESS OF THE IMPLEMENTING OF THE STRATEGY

(40) Although some doubts about the prospects of shipbuilding in Russia may appear from time to time, if there would be admitted the system errors of planning, such as: construction for the needs of the Government of vessels in the shipyards of Russia without the pre– renovation of shipyards and without the introduction of modern technology of serial ship construction using the modules assembling the erroneous definition of the class of vessel which planned to be build, with the outdated technology and without the renovation of shipyard, for example, the construction of fast– speed ferry which would be unprofitable to operate due to the limited cargo capacity of the cars onboard and due to the excessive fuel consumption of the high– speed craft, etc.

The second example in regard to the possible mistake to construct today of the fast ferry is discussed in more detail in the published book: Evaluation of commercial vessels, marine company’s assets and ocean resources: textbook – M.: Publishing house of the RSA, 2010, 345 p., Chapter 19.2 ISBN 978–5–93027–002–0 (http://lccn.loc.gov/2011396280) available online (www.wealth– marine.com)

Such probable errors in the initial planning stage of performance of the Strategy would like to avoid

THE SOCIAL IMPLICATIONS OF INVESTING IN THE CONSTRUCTION OF VESSELS FOR FEDERAL NEEDS (if without the previous construction of new assembling shipyards or the re-equipment of acting ones in continuing their work to build ship modules for assembling ships for market demand)

(41)

We should also pay attention to the potential negative social consequences of investing in the construction of ships for Federal needs, if is no market demand in respect of such classes of ships, and if at the same shipyard at the same time are not mass– constructed ships which meet the demand

According to the last experience of construction for the needs of the USSR Government of such classes of ships, which for there was no market demand, it is known that Federal subsidies for the shipyards were not accompanied by the equivalent supply of consumer goods to the cities which in these shipyards were located As a result, the local commodity markets received money, not goods, and thus prices sharply raised in the retail markets, and the citizens went shopping in nearby towns

These probable negative social impacts could be avoided if the construction of ships for the Federal needs of Russia would be in the shipyards outside Russia This also contributes to cost savings of Russia budget that is the taxpayers' money savings, but, the avoidance of the negative effects on the economy of Russia in itself is not lead to the development and the market demand for ships of chosen classes is of the maximal importance

20 THE CONCEPTUAL PECULIARITIES OF SHIPBUILDING DEVELOPMENT STRATEGIES IN RUSSIA AND IN THE OTHER COUNTRIES

(42) It is interesting that the first and second listed ahead versions of the investment under the National Shipbuilding Procurement Strategy in Canada, as the example, do not differ conceptually from Russian Strategy of development of shipbuilding industry

The prospective classes of the merchant ships for the development of their construction with Russian Strategy have being listed: ice navigation tankers and LNG–tankers icebreakers container ships of ice navigation offshore platforms and equipment to work on the Arctic shelf research vessels suitable for navigate in the Arctic the marine engineering for power generation in coastal areas, including from renewable sources the floating equipment for the processing of gas in Arctic

The National Shipbuilding Procurement Strategy (NSPS) investments are approximately CAD $ 33 billion for 20– 30 years all over Canada and planned the creation of approximately 15,000 new jobs

(43) And some differences of classes of ships are which planned to be built in Canada the NSPS

There are similarities – both Strategies announced the development of the shipbuilding industry, but they are actually aimed for the development of shipping in the freezing seas and not directly shipbuilding And ships navigation in the freezing seas and in Arctic latitudes could usually be developed at the expense of the Government subsidies, and market demand for the navigation is insufficient

The similarity of strategies in Russia (Strategy of development of shipbuilding industry) and in Canada (NSPS) can also be recognized in the fact that they are both different from the Strategies of serial ship construction in Korea Republic, Japan, Taiwan or in China, aimed for meeting of the market demand And the ships for the needs of their Governments are built in Korea Republic, Japan, Taiwan or in China at the reasonable prices on the same shipyards in parallel with the serial construction of ships for market demand as the first activity

THE TECHNOLOGICAL FEATURES OF SERIAL SHIP CONSTRUCTION IN THOSE COUNTRIES WHICH OCCUPY THE FOREFRONT OF THE INDUSTRY

(44) The world shipbuilding industry has entered into a cycle of recovery in 2003. Along with Korea Republic and Japan came to the forefront China solves the problem to become the largest shipbuilding country

Among the advantageous factors of Chinese shipbuilding industry has access to resources, including facilities and equipment for shipbuilding, as well as the large domestic market, as the integration process of China into the world economy, and partnership with Hong Kong, Macao, etc.

Russian shipbuilding industry carries out export deliveries of warships for more than 1 billion. US dollars equivalent a year, it is around of 20% of these classes World total output Russia is being built some other classes of ships as well

Russian press has repeatedly expressed opinion that the Russian shipbuilding industry is required to adopt the experience of effectiveness of vertically integrated holdings, which is typical for leading countries in this field, including Korea Republic, Japan, Taiwan or China, etc.

21 The acting shipyards in Russia can carry out the construction of low and medium tonnage vessels And the shipbuilding possibilities are restricted by maximal displacement empty of around 100 th. ton In addition, in the construction of ships in Russia are generally used the imported compartments Besides, the largest shipyards are located in the European part of Russia We can concern these all as the industrial lacks and subjects of working out in perspective

(45) In order to see the advantages or disadvantages of the third version of the investment,- not directly in the construction of ships, and in the conversion of the facilities of the shipbuilding industry in Russia, in the creation of new jobs and in the development of modern technology of mass ship construction,

Need to take into account the technological features of mass ship construction in those countries which occupy the forefront of the industry, in particular, take into account the features of shipbuilding in Korea Republic, Japan, Taiwan or China

Technology of serial ship construction in these countries is a modular that is not sufficiently developed in Russia and is an economical obstacle, as technology of modular shipbuilding could be considered as the analogy of line production in the automotive industry

That is the third version of the implementation of Federal investment under the Strategy would mean the creation of serial modular ship construction in Russia, and this requires the creation of new shipyards for batch assembling of ships of the modules, delivered from the other shipyards located in the Pacific in Russia and abroad, united with the assembling one

THE GENERAL TECHNOLOGY OF SERIAL SHIP CONSTRUCTION WITH THE UNITY AS THE TECHNOLOGICAL COMPLEX OF AVAILABLE SHIPYARDS AFTER THEIR CONVERSION

(46) The shipyards for assembling in the economic and technological aspects could work in each region of Pacific coast for uniting in this regions of many acting shipyards after their conversion, specializing in the production of modules for the assembling of ships series, and all the shipyards acts as the complex unit one in cooperation

For operation of the specialized shipyards except of the assembling sites, that is, except the dry docks and slipways, it requires the organization of delivery and cargo operations with the delivered modules, the availability of storage facilities for compartments of constructed ship and heavy– lifting cranes for cargo operations with the modules on the territory of shipyards

And for transportation of the assembled ships compartments to the shipyards for assembling from the others shipyards, which have got constructed these modules,

I.e. to unite technologically the other shipyards with the assembling one can be used the ships assigned for transportation of large cargo on deck, or the floating docks, – self–propelled or towed

Of course, these large cargo ships or floating docks for delivery of modules of ships are needed if the specialized shipyards for assembling and other yards are located in remote places, for example in the case where the assembling shipyard is specialized for technological uniting of several available shipyards, constructing of modules for the batch shipbuilding

All mentioned shipyards could be the independent legal entities that are united by the common contracts and worked in cooperation for modules making and assembling of mass constructed ships: as the specialized shipyard for assembly of ships series of modules, and available shipyards upon conversion, carrying out the construction of these modules

22 THE POSSIBILITIES OF THE INTERNATIONAL COOPERATION IN SHIPS BATCH CONSTRUCTION OF MODULES

(47) It is necessary to remark that to operate the specialized shipyards for assembling the partnership of the shipyards could have not only national, but also international characteristic

For example, if one create a specialized shipyard for assembling of ships in the Pacific coast region of Russia, then modules for ships series assembly can be made not only in the other shipyards in this definite region which will have orders, but also can be bought in the shipyards of Korea Republic, Japan, China, Taiwan, Vietnam, etc.

This is a peculiar combination of the listed ahead the second and the third versions of the Strategy investments, which cover the contract for modules construction of ships in the overseas (see version two of the Strategy implementing), and in assembling ships in Russia (version three)

And the possibility of the shipyards for assembling in European region of Russia could be implemented not only in the cooperation of the shipyards of Russian regions but also in the shipbuilding of other European countries, where modules of ships series for assembling in the shipyards of Russian European regions could be constructed (like investments in «Arctech Helsinki Shipyard», Finland)

That is, for the success of the Strategy in addition to funding from Government of Russia and in addition of the investors companies in Russia, who are interested to participate that is desirable, the great benefit could give the international partnership on the basis of cooperation with the shipyards for assembling on the both parts of East and West in Russia, as well as use of the geography of Russia between Asia and Europe that is fruitful for the international cooperation in shipbuilding and for the industrial partnership with Asian industrially developed countries, what is important for the purchase of parts, equipment and machinery for ships construction

SHIPBUILDING INDUSTRY TERRITORIAL STRUCTURIZATION AND THE CREATION OF NEW SPECIALIZED SHIPYARDS

(48) By the Decree number 394 of 21 March 2007 the President of Russia was established, and by April 2009 finally formed the «United Shipbuilding Corporation», JSC («USC», JSC), which for it is assigned the inventory and modernization of had joined shipyards, the organizing of effective shipbuilding, and carrying out of ships on repair

During the period of 2007–2008 in the complex of «USC», JSC three of the regional ship-construction centers – affiliated joint-stock companies were established:

1. «West Center of Shipbuilding and Ship repairing»

2. «North Center of Shipbuilding and Ship repairing»

3. «Far East Center of Shipbuilding and Ship repairing» («FECSR», JSC) which in are 100% of stocks in the Federal possession.

23 (49) On September of 2009 the Board of «USC», JSC directors decided to establish in the complex of «FECSR», JSC of four independent zones in territories of Russian Far East and Pacific Coast:

A. The zone of shipbuilding «Vostok» («East») in Primorski territory is developing for construction of drilling platforms

B. The zone of shipbuilding «Zvezda» («Star») in Primorski territory aimed to construct of large tonnage LNG-tankers

C. In the Khabarovsk region on the basis of «Amurski Shipyard», JSC is developed the zone of shipbuilding «Amur», focused on the construction of submarines and surface ships, as well as on the issue of merchant ships

D. In the Khabarovsk Shipyard is developed the zone of small tonnage shipbuilding mostly civil, etc.

(50) The complex of «Far East Center of Shipbuilding and Ship repairing» consists of stock property in the shipyards and companies available in the Far Eastern Region of Russia

Scientific Research Institute «Bereg», JSC «179 Ship-repairing Yard », JSC «SVRC», JSC DVZ «Zvezda», JSC «Khabarovsk Shipard», JSC «178 Ship-repairing Yard», JSC «92 Ship-repairing Yard », JSC «Amurski Shipyard», JSC HC «Dalzavod», JSC «Nikolaevsk-on-Amur Ship-repairing Yard», JSC

On the Pacific coast of Russia the shipbuilding yards are also which are not parts of complex of the «United Shipbuilding Corporation», JSC

On the territory of the Far Eastern Federal District are about of 25 companies total related to shipbuilding and maintenance industry

They proportional part is roughly 6% of production of Russian shipbuilding and includes more than 700 hectares of land and about 30 million sq. feet of production space

And the industry of sectional mass construction in Russia ship could generally be the creation at each of established shipbuilding centers and zones in them of the specialized shipyards for assembling, which would promote to the market of products of nowadays operating shipyards with their experience to produce modules to assemble ships series, and to promote the products of other companies – partners of the shipyards

So, the holdings of the assembling shipyard in each place and it partners, operating shipyards conversed for construction of modules for ship assembly would act as the unit one enterprise

24 THE NECESSETY OF THE AUTOMATION OF THE SHIP COMPARTMENTS CONSTRUCTION IN THE RUSSIAN ACTING SHIPYARDS

(51) That is, the modern manufacturing of modules of ships for further assembly of series in the specialized nowadays shipyards intended for assembling is very different from the technology of hand–mechanical assembly of modules ships, which for example, is used in Russia in the construction of the compartments of ships, and is different from the manual mechanical assembly, which is usually used in acting shipyards

And it must be borne in mind that the automation of construction processes of ship structures is needed for the Russian shipyards, and this automation is feasible only: if the series–built ships are constructed of modules if operates the specialized shipyards for assembling and consuming the modules made from the other shipyards if the shipbuilding is based on technological cooperation

The automation within the conversion of working shipyards would be difficult or impossible even if they will not cooperate with the shipyard for assembling and if it is not for the corresponding change in the type of products of working shipyards, meaning the technological transition to the construction of parts of the serial ships, – modules, for the delivering to the specialized shipyards for assembling, instead conducting of the full cycle of shipbuilding in the acting ones

When the structure of products of each one of the working shipyards changed, that is, with their specialization, the technological cycle of ship modules construction is reduced compared with the cycle of construction of the complex vessel to the set of universal technological operations, and it opens the possibility of mechanization and automation of processes of modules construction

(52)

THE NECESSITY OF CONVERSION OF THE ACTING YARDS (59) And the industrial product of the acting shipyards could not be the ships constructed in complex, as it is them for today those is very expensive the ships of outdated projects of small tonnage constructed ships not equipped by the modern machinery and probably the ships not satisfied the market demand promptly

But subject of these shipyards specialization could be the production of components for mass construction of the modern ship, i.e. the product changed would be the modules for them deliver to the shipyards for assembling in the next

29 THE TERRITORIAL DIFFERENCE OF THE USUAL SHIP CONSTRUCTION TECHNOLOGY IN RUSSIAN YARDS AND ABROAD (60)

Historically, shops for constructing of ships’ parts and for working out of the modules, as well as slip– ways and dry docks for the assembling of ship in the shipyards in Korea Republic, Japan, China, Taiwan, Vietnam, Singapore are usually located in the same territory

Perhaps in Russia it is necessary to unite technologically the several shipyards located at different sites in relatively close proximity on the basis of their cooperation with the shipyards for assembling

This probable difference between the conditions in Russia from the another countries does not matter and is not related to the shipbuilding technology The pre–constructed modules could be delivered using ship suitable for the transport of large cargo on deck, or floating dock, – self– propelled or towed to the shipyards for assembling of serial ships

THE EXPERIENCE OF NEW INDUSTRIAL COMPLEXES PLANNING SUITABLE FOR THE SHIPYARDS CREATING IN RUSSIA

(61) Noteworthy, as well, the experience of the industrial facilities creating in Asian countries could be used to build the new specialized shipyards in Russia for assembling of ships, and for the converting of the working shipyards with their automation and with changing of the products, – from the complete construction of ships to mass– constructing of modules for ships assembling

The experience of new shipyards creating in Asian countries could be find for any industrial sectors and, in any case, it is useful when investing in the shipbuilding industry, which would be reasonably priced and done in the interests of all parties: for Government of Russia and for the employees of shipyards as well as for the investors – companies of shipyards owners and lenders, such as commercial banks, which would provide loan funding for investing in the shipbuilding industry

Let explain the experience of new plants creating by the example:

When traveling in Asian countries one can see the construction of residential districts on the territory, which had been empty for several months or a year ago, and a year after in this place one can see the residential buildings and plant under construction, and a next year later the plant will operate, and will be fully populated the neighborhood on the territory which was an empty land for two – three years ago

30 (62) Given that the new workers in the shipbuilding industry in Far East Russia are planned of 5 to 8 th. people, is logical the following sequence of the investment: first, with the Federal subsidies built housing for employees and the residential infrastructure offered for mortgage subsidy for the participated employees next, they will return the subsidy by the earning income while participating in the construction of the shipyard and working in the new-built shipyard

Thus, the investors in the construction of the plant would get hired labor at reasonable prices, and families of employees receive the social adaptation and jobs, and it is important that the housing for the employees and residential infrastructure is being built first and the industry – the next

In other words, it is the development in the interests of different parties and social layers, both in the interests of employees, and in the interests of investors with ownership could be new shipyard for assembling

Such an experience can serve as a clue to what purpose would be to give priority of the direct funding under the Strategy, in particular, if you need to choose between two versions for the initial investments: in the facilities creation of the newly built shipyard for assembling, or in the assets conversion of the operating shipyards, or in the creation of employees housing, given that the obtained estate of these people and their liabilities could be a good motivation to them for participation in the Strategy

THE SCHEMATIC ILLUSTRATIONS OF THE SPECIALIZED SHIPYARD FOR SHIP ASSEMBLING

(63) (Are used schemes of «Zvezda» shipyard project, http://dcss.ru/projects/koc-oao-dvz-zvezda.html)

31 (64) Land plots for specialized shipyards for assembling in Peter the Great Bay are located at a distance commensurate with the majority of the acting shipyards of Russian Pacific Coast

Expecting foreign partners in Korea Republic, Japan or China, given the accessibility along the highways, railways and in the sea, they could participate in the next in cooperation and constructing of modules for the assembling of ships in the specialized shipyards

The project developer: «Technology Center of Shipbuilding and Ship Repair», JSC The project consultants: IMG Ingenieurtechnik und Maschinenbau GmbH (Germany) Project realization 2012 – 2024 The new employees demand expected around of 7.5 th. people

The main steps of project «Zvezda», JSC shipyard

1. Construction of the shipyard facilities : the shops of ships modules production and painting chambers for the modules, the open slipway and dock for of the launch of medium-size vessels constructed

2. Construction of the Dry dock and the industrial shops for the large-tonnage ships construction

3. Construction of the Dry dock and the shops for production of modules for offshore platforms assembling, «Vostok» shipyard

THE INVESTMENTS IN SHIPBUILDING IN FAR EAST OF RUSSIA

(65) The construction of the shipyard «Zvezda», JSC is not yet completed The estimated investments in the framework of «Far East Center of Shipbuilding and Ship repairing», zones of shipbuilding «Vostok» and «Zvezda», JSC-s according to the available data are (1, 2)

1. According to preliminary estimates from different sources of data to create shipyard «Zvezda» the investment is approximately from 700 mil. to 1.1 bln. in US dollars terms Planned contribution from the partner company «DSME» Republic of Korea is estimated at approximately 25% of this amount

2. Investments in construction of the shipyard «Vostok» according to preliminary estimates are about 700 mil. US dollars equivalent

(66) Expected revenues of shipyards of «Far East Center of Shipbuilding and Ship repairing», JSC per decade can be characterized as follows

Roadmap of merchant ships and marine engineering in Far East of Russia for around 10 years is in the equivalent of 5 bln. US dollars

In view of the expected contracts likely total annual income of «Far East Center of Shipbuilding and Ship repairing» is equivalent to 8 bln. US dollars per decade

In particular, the expenditures of «Rosneft» for the shipyards in Far East of Russia Expected from 2,5 to 2,6 bln. US dollars equivalent

The payback period for the shipyards after their completion is variously estimated from 7 to 12 years

Federal participation in the development of the shipbuilding industry includes not only the investments for construction of the shipyards and not only the Federal orders to build ships, but also legal support to shipbuilding by the relevant decisions and programs of Government and the Laws for assistance for shipbuilding development, those influence on economic performances of shipyards can be monetary evaluated

32 THE FEDERAL DECISIONS AND PROJECTS FOR ASSISTANCE OF RUSSIAN SHIPBUILDING DEVELOPMENT STRATEGY IMPLEMENTING

(67) You can, apparently in a very general approach to estimate the impact of these decisions of Government, of Federal laws and Projects (Federal Programs), as 2-3-fold increase in profits in shipbuilding, compared with the average in the rest of the industry

1. Russian Federal Law of November 7, 2011 # 305– FZ «Of the Shipbuilding development support …»

2. Strategy of development of shipbuilding industry for the period up to 2020 and for the perspective, approved by the Order # 354 on September 6, 2007 of Russian Ministry of Industry and Energetic

3. The Federal Program «The shipbuilding development for 2013 – 2030 years» (Decided by Order of Government of December 24, 2012, # 2514–р), etc.

From an economic point of view, an increase in income, in general, is equivalent to the proportional increase of assets value in shipbuilding industry

THE DECISIONS OF THE AUTHORITYES OF THE DEVELOPMENT OF SHIPBUILDING IN FAR EASTERN REGION OF RUSSIA

(68) 1. On September 2013 President of Russia at the meeting «Of the prospects of development of domestic merchant shipbuilding» instructed to develop of the shipbuilding industrial cluster in Far East of Russia on the basis of «FECSR», JSC for the production of marine equipment and machinery (Instruction № Pr-2236 of 09.24.2013)

2. In June 2014 President of Russia proposed to extend the powers and objectives of «Far East Center of Shipbuilding and Ship repairing», which is to become the general contractor of the offshore and marine equipment for the Arctic shelf in Russia and to increase the localization of ships construction in this region

The development of shipbuilding in Far East of Russia and increase of efficiency of development of the continental shelf of Russian Federation in Far East territory and in Arctic on July 21, 2014 signed the Decree # 524 of President of Russia « Shipbuilding development in Far East of Russia»

3. The Instruction of Government of Russia on September 12, 2014 # 1804-p is also aimed at improving the competitiveness and investment attractiveness of domestic shipbuilding of Russia Far East Territory

RUSSIAN FEDERAL LAW OF NOVEMBER 7, 2011 # 305– FZ «OF THE SHIPBUILDING DEVELOPMENT SUPPORT …»

(69) http://www.rg.ru/2011/11/09/sudno– dok.html Federal Law of Russian Federation dated November 7, 2011 # 305- FZ «On Amendments to Certain Legislative Acts of the Russian Federation in connection with the implementation of measures of federal support for shipbuilding and shipping»

By the Federal Law # 305- FZ it provides for shipyards: the abolition of value added tax the income tax reduction from 20 to 6% the cancellation of a 20-year tax on water reservoirs use, property and land abolition of customs duties in the shipbuilding industry and the value added tax on imports of equipment for shipbuilding, which have no analogues in Russia

In a very general approximation to estimate the impact of Government assistance for shipbuilding development by means of the protective legislation of Federal laws and Projects (Federal Programs), is equivalent of 2 3-fold increase in profits in shipbuilding, compared with the average in the rest of the industries

33 THE INVESTMENTS GUIDLINE PRESENT VALUES OF PROSPECTIVE PERIODS TOTAL IN THE SHIPBUILDING DEVELOPMENT IN RUSSIA PACIFIC REGION

(70) The investing in shipyard «Zvezda» ~ (0.70 1.10) bln. US dollars equivalent

The investing in shipyard «Vostok» ~ 0.70 bln. US dollars equivalent

Impact in the shipyards investments of the shipbuilding Federal contracts revenues ~ ~ (8 + (2.5 2.6)) × ½ bln. US dollars equivalent

The legislative support factor ~ 2 3 – fold

The private investors’ participation factor ~ 2 3 – fold

Comes to [(0.70 1.10) + 0.70 + (8 + (2.5 2.6)) × ½] × (2  3) × (2  3) ~ ~… 40 bln. US dollars equivalent  25 %

(Present Worthies in Russia Far East Shipbuilding development approximation)

THE PARTICIPANTS OF THE STRATEGY IMPLEMENTING THE OPTIONS OF THE INVESTMENTS CONSOLIDATION

(71) With proper planning are possible joint investments in the development of shipbuilding in Russia due to government subsidies, and with the participation of companies of investors from Russia and from the overseas

Of course, this positive outcome is possible if are being built ships series comply with the market demand and not only for the Federal needs

With reasonable planning the total consolidated budget for development of the shipbuilding industry in Far East of Russia including government subsidies and private investment, can exceed to a certain multiplicity, and this is a good opportunity to improve fundamentally the shipbuilding industry

For effective fulfillment of the Strategy arises the question of the results possessing for participants

One might consider the results of the Strategy successful if finally would have been created the investor–owned shipbuilding companies on the concepts of cost–effective sustainability which do not require endless subsidies of Russian Government

THE POSSESSING OF JOINT PROPERY RIGHTS IN THE SHIPYARDS

(72) From the economical point of view the companies of investors would need to have the opportunity to lease gradually or purchase the property rights of the the part of facilities assets of shipyards made, which creation was paid first for by subsidies of Russia Government

Logically to do that the participants would refund: A. Federal subsidies around the ((0.70 1.10) + 0.70) bln. US dollars equivalent

B. and the proper interest for Federal subsidies

Otherwise if the rights will not go to owners there probably are not good economical logic, as the Strategy would improve general economics and would not make the endless expenses

That is finally the best is if : 1. the industrial rights for new-made shipbuilding facilities would be possessed by the private investors 2. and the financial result of the Strategy would go to Federal government

This logic is economically reasonable regard the Strategy Hope it is supposed, but to be honest it is out the important attention in the Strategy participants today

34 (73) It is required to pay some attention here for the circumstances following the Strategy implementing

For example, such a possibility of the companies of investors of facilities created for the subsidies of Government of Russia to lease the facilities of Federation until the complete redemption of facilities the construction of ships for the Federal needs of Russia, of the Strategy prescribed classes, would be as: ice navigation tankers and LNG–tankers icebreakers container ships of ice navigation offshore platforms and equipment to work on the Arctic shelf research vessels suitable for navigate in the Arctic the marine engineering for power generation in coastal areas, including from renewable sources the floating equipment for the processing of gas in Arctic

And the construction of these ships the participants would being carry out at the expense of profit earned of construction of mass– produced ships for the market demand

The redemption by the private parties of the Strategy of the made facilities is completed if are:

– the fulfillment of the parties’ finance obligations

– the rights of the facilities possession have go to private investors for the created assets

– will be reimbursed the financing of Russia Government expenses in the Strategy

– will be completed the creation of up to 8.0 th. jobs and will be done the employees social needs

In turn, the employees will have fulfilled the responsibilities that is will have repaid the subsidies spent by the Government Russia for social development that is the subsidies for the professional education and for the creation of housing and residential infrastructure foe the shipyards teams

SHIPS FOR THE MARKET DEMAND WOULD REASONABLE TO BE THE MAIN PRODUCTION FINALLY WITH THE PARALLEL CONSTRUCTION OF THE SHIPS FOR THE NEEDS OF THE GOVERNMENT

(74) For Soviet Union at last, as for Russia nowadays and probably for USA, which had and have the shipbuilding of not enough market nature, is characteristic the construction of ships for the needs of the Governments, as well as the parallel construction of ships for the market demand

It predetermines by the features of the technology

The shipbuilding technology typically is of pulsing nature of employees’ occupation, as the work intensity in ship construction is as higher as closer the time of the finished vessel deliver to the customer The job for workers is not enough when the laying of the keel of the new ship

To align the pulsing of job intensity in the shipyard is usually doing the parallel

– of the construction of ships for market demand and ships maintenance

– or the construction of ships for the needs of the Governments in these countries

35 (75) Apparently, for the development of the shipbuilding industry in Russia, and for the complete redemption by investors of the shipyards facilities created in the partnership with use of the Government of Russia subsidies, it would be preferable the opposite proportion: the parallel production would be the construction of the ships for the needs of the Government by means of the investing of the profits the main activity of ship series construction to meet market demand at acting available shipyards, converted for constructing of the modules for the specialized assembling shipyards

It would be better not directly invest the Federal funds in the construction of ships for the needs of Government, but first of all invest in the creation of modern shipbuilding technology with the partnership of the shipyards for assembling and the converted existed shipyards for construction of modules

In this case I have in mind that under the Federal support for the conversion of existed shipyards in the longer term there is the possibility of the more effective constructing of ships for the needs of the Government besides the starting of the ship mass construction to meet the market demand

THE EXPERTIZE OF THE WAYS OF THE SHIPBUILDING DEVELOPMENT STRATEGY IMPLEMENTATION

(76) It would be underlined that from financial point of view is not much difference of three versions ([1, 2] + 3) of the investment of Federal funds for the Strategy fulfillment in the fleet replenishment [1, 2] or in the development of the shipbuilding industry (3) including the sub– version of the Strategy implementing: the purchasing of parts for ships construction from the overseas, that corresponds to version (2, 2 + 3) and construction of ships for the Federal needs in Russia in the newly created shipyard for assembling, that corresponds to version (1 + 3)

Let remind briefly the versions of the Strategy implementing:

1. Construction of ships for the Federal needs in Russia 2. Construction of ships for the needs in the shipyards outside of Russia 3. Investing not in the construction of ships, and in the shipbuilding facilities construction and conversion

I.e. the final economical indexes for the investors (Federal or private) could be the same for any of the considered version, and the difference of results of the versions is of the technological and economical natures

That is the most important result not the intermediate but the final is would it be the innovational shipbuilding industry in Russia or not

Whether it will be ship construction technology updated before to build for the Federal needs, or before the construction of these vessels will be at the available in Russia shipyards, then costs from the Federal funding of the Strategy could be invested in other industries, not specifically in shipbuilding

In this option the shipbuilding industry will not be developed that in it's turn will have negative influence on the economic results of the construction of ships for the Federal needs of Russia

36 THE SOURCES AND THE AIMS OF THE STRAREGY FINANCING

(77) Despite the fact that the Strategy do not contains the direct requirements to invest in the development of the shipbuilding industry, which would correspond to the above– considered version 3, that is, the Strategy does not prescribe the creation of the shipyards for assembling and the conversion of the available shipyards, and generally in the Strategy is only a list of ships planned for construction, which corresponds to 1 version, however, under the laws of Russia and the rules of business for other possible participants, in particular, for companies or investors and for the administrations in the regions, there are the opportunities to carry out any of the three versions (1, 2, 3 and intermediate) of the Strategy implementing depending on the interests of these participants

That is using economic instruments one can find sources of seed money for the development of the shipbuilding industry, because in the long term there is the guarantee of Government of Russia for the construction of vessels, and the profits would be directed to refund of the initial investment

For example, the sources of the initial investment for the Strategy on the conceptual level could be:

1. the loans in banks to create new shipyard for assembling or to convert the available shipyards, because there are guarantees of repayment of the loans with the financing of the ships construction for Government of Russia in accordance with the Strategy

2. the sale of shares of investors’ companies who plan to build shipyard for assembling and to implement the conversion of available shipyards, given that these stocks have a good price for the capitalization when constructing of vessels for Government of Russia in accordance with the Strategy, etc.

(78) Both of listed examples of initial investment sources with funding by Government of Russia of the ships construction in the line for the Strategy in an economic terms are almost equivalent for the direct funding from the Government if it would being done the creation of shipyard for assembling and the conversion of available shipyards

And for that version the refunding for the Government will be by the ships deliver for Federal needs in accordance with the Strategy, that is by the investing in the ships construction of the profits generated in the created facilities working for market demand of the serial ships

This option of the gradual buyout of created shipbuilding facilities by the private investors corresponds with the option of leasing (– purchasing) of the facilities for shipbuilding

That is from the economic point of view almost the equal in many respects are all three considered versions of the initial funding for the development of shipyards:

A. the lease version, which for the investments for the Strategy objectives directly issued from Government of Russia, and the investors then lease the facilities being created or buyout them gradually with paying out by the ships deliver for Federal needs

B. the loan version, which for the investments in shipyards is giving of commercial banks, and the loan will be repay by the profit of the ships deliver for Federal needs

C. the stocks (shares) version of the starting funding, which for the investments in shipyards are received by sale of shares of investors' companies, for example, by the sale of: shares of being built shipyards for assembling shares of being converted available shipyards

37 And the estimated value of the shares is high enough because of Government of Russia support for the construction of ships for the Federal needs

(79) Obviously the other versions are possible close by the economic value of the initial investments funding ways in the development of shipyards or the intermediate investment versions

In the presentation considered the links made primarily on the first version (lease version A) without prejudice of logic with the possibility the other two versions (B and C) of the initial funding which are close economically

In Russia for the shipbuilding development the system of leasing offers for the customers the opportunity to ship construction debt financing by 3-5% per annum for up to 10 years : the customer of ship produces 20 per cent advance payment to secure the contract and the «USC», JSC pays the rest funding for the construction of the ship

Although it is possible that the stock (share) version C of the initial investment probably is more usable for the separate account of the Federal spending subsidies for the Strategy, as for the issue of shares in these goals is possible to establish the separate joint stock entity, for example, the assembling shipyard like «Zvezda», «Vostok», JSC-s or «Far East Center of Shipbuilding and Ship repairing», JSC as the holding company

THE INVESTMENTS IN SHIPYARDS DIRECTLY ISSUED BY GOVERNMENT OF RUSSIA AND THE COMMERCIAL INVESTORS COULD AND WOULD REPAY FOR THE REDEMPTION

(80) Despite the fact that various versions of the initial funding formally are welcome on the conceptual level, and the versions of private investors participating discover the diverse options of the Strategy implementing could be recommended: to give preference to the direct financing of investment by the Government for the creation of new facilities of the shipyards and the next gradual redemption of new facilities by the private parties that is could be recommended the lease version being discuss

And the another sequence which for the funding is not provided by Government of Russia directly into the shipyards facilities could lead to creation of unwanted payment derivatives based on the future obligations of Government

In the versions of the another possible sequence of the funding (the loan version B, the stocks version C), which are probably less desirable from an economic point of view, the funding for the creation of new facilities of the shipyards directly produces by the commercial investors

And Government would invest for the shipbuilding industry development the Federal obligations to pay to the commercial investors in the future, and the form of the obligation (considered versions), which are substitutes of money, could have a negative macroeconomic impact as the hidden financial emission

Therefore, from the economic point of view the logical is the lease version A, which for the investment in shipyards the Government of Russia would make directly and the investors in the next would lease and gradually purchase of the being created facilities by the ships deliver for Federal needs paid out by the profit of the shipyard redempted

38 THE MOST GENERAL CHARACTERISTIC OF THE OBJECT OF INVESTMENTS

(81) Apparently, for the survey of status of the marine industry in the Far East of Russia, Prior to the implementation of the Strategy it is important to define conceptually the versions of the development of marine industry and these versions generally form the network and are the most important characteristics of the object of investments: the versions of investment of Federal funds in the development of fleet or shipbuilding industry (tree general versions ahead and intermediate versions): (1) construction of ships for the Federal needs in Russia; (2) construction of ships for the needs in the shipyards outside of Russia; (3) investing not in the construction of ships, and in the shipbuilding facilities construction and conversion; (…) intermediate versions and the versions of the initial funding, as: (A) leasing of facilities, (C) stock issue for finding, or (B) credit arrangements, as well as their combinations (…)

The occurring network of the options may lead to several possible scenarios of the Strategy execution, say, at least five real scenarios, which could be the subject of the systematic comparison and choice the best option by the economical objectives

Probably such criteria are welcome : Internal Rate of Return (IRR); Net Present Value (NPV) Payback Period (PP); The minimized costs, as Present Worth (PW), etc.

THE DEMAND OF VOCATIONAL TRAINING AND REPLENISHMENT IN THE SHIPYARDS OF EMPLOYEES OF ALL CATEGORIES

(82) There are differences of estimates of the total number of workers of all categories in shipbuilding and repairing industry in Far East of Russia

The number of workers of shipyards in the complex of «FECSR», JSC comes from12 to 15 th. people

And total the workers in this industries in Far East of Russia counted from 22 to 25 th. people.

Also, there is the difference of estimates of the number of new jobs created in the Primorye Territory in the established areas of shipbuilding «Zvezda» and «Vostok»

It is expected that the number of new jobs will be from 5 to 8 thousand. of people in sum

According to some estimates, there is tendency of reducing the number of employees for the third part on available shipyards for over the five years, and the increasing of the average age of employees

The shortage of people in shipbuilding in Far East of Russia is actual and it refers to the professionals of different qualification levels and specialties, but most problems have accumulated due to the lack of working professionals

(83) Main causes of the lack of professional workers are:

– the demographic decline and the lack of young people

– low wages in the shipyard for young workers without experience

– insufficient social guarantees for young workers and the lack of available housing of shipyard

– in accordance with Russian legislation young workers after colleges graduation are usually subject for the recruiting to the arm-forces

In addition there is the trend of hiring of qualified employees from Far East of Russia in the Western and Northern regions of Russia, in Korea Republic or in China

Shipbuilding is capital-intensive and high-tech industrial sector and requires 8 thousand. of people highly qualified in the Far East of Russia the only

Besides of training of professionals it requires the social conditions of sufficiently high standard

39 For example, one needs to create an infrastructure and to build the residential area for the families accommodation of at least 25 th. of people, part of which will become employees in the new shipyards

It is required to build approximately 5.0 mln. sq. feet of residential buildings, which cost could be approximately 500 mil. US dollars equivalent and sometimes is not taken into account initially in the investment planning of the shipyards creation

In addition, the widespread is the opinion that the development of shipbuilding industry in Far East of Russia is required to start with the help of experts from the other areas of Russia and from the other countries

In fact, this view is associated with an obvious contradiction: since the cost to pay for the invited experts will be maximized, so that will increase the cost of ships had being build and this has a negative impact on economical competitive opportunities of shipbuilding enterprises

(84) The problem is in the fact that the activity of «USC», JSC and its subsidiaries, as well as the Government decisions on the development of shipbuilding and maintenance almost do not deal with the training of workers, not deal with the teams building and collectives development

The analysis of numerous articles on the subject, as well, confirms, that the parties of the Strategy pay little of importance for the tasks and challenges of shipbuilders training, and these problems seems to be most important, if we estimate the duration of their decisions and costs than all other steps for the development of innovative shipbuilding industry in Far East of Russia

Among the 8,000 of new employees given the nature of today's high– tech shipbuilding can are required in Far East of Russia and about 4,000 employees have to be educated in the universities of professions Ship Construction Marine Engineering Electrical engineering Welding technology Structural materials technology Automation technological processes, etc.

(85) In addition to this requires that the rest 4,000 new workers in Far East of Russia would have the professions in the shipbuilding technology, graduating from the colleges in Russia or abroad, as well as from the training centers of the shipyards

As for the Naval Architecture, it is evident that the title of profession first of all means one of the kinds of the occupation, – in the ship design process participation of professionals of Ship construction, along with other kind of occupation of these professionals, – working in shipyards and organizing the shipbuilding technology

If we talk about the Curriculum of training programs for bachelor's and master's degrees generally can be considered some synonymous sense of the titles of the professions: Naval Architecture, Ship Construction and Marine Engineering.

And the first title Naval Architecture means the occupation in the design process and the second title Ship Construction means the occupation in technological processes of shipbuilding, and both mean the profession of the Marine Engineering, – we could consider it in this manner

For shipbuilding industry are practically relevant the experts in the Construction of marine engines, which is closer to the Mechanical Engineering

40 CREATING OF PROFESSIONAL ENVIRONMENT OF THE NAVAL ARCHITECTURE, SHIP CONSTRUCTION AND MARINE ENGINEERING

(86) Creating of professional environment of Naval Architecture, Ship Construction and Marine Engineering, that is, the training system and the availability of sufficient number of employees of various skill levels may be considered critical and predetermining two– thirds of the overall duration of the Strategy implementing

(in addition to the necessary improvement of shipbuilding technology in Russia by construction of the specialized assembly yards for mass shipbuilding of the modules and due to the renovation with automation of processes in the rest shipyards in three shipbuilding regions of Russia: West, North, Far East)

Indeed, the modern equipment to create the shipyards for assembling and the converting of shipyards acting could bring, for example, from the Korea Republic, Japan or China, but the quick training of professionals and creating of teams for the implementation of modern high– tech shipbuilding in Russia is not possible to bring from the overseas

The training of new specialists of the Naval Architecture, Ship Construction and Marine Engineering in the universities is the most difficult step and time– consuming

For example to keep the specialists number of 4,000 the graduation from universities is required no less than of 300 experts annually (87) And in the start– up of the Strategy, i.e. for about 5– 10 years it is required to educate from 400 to 500 graduate professionals each year, whom three quarters are to be trained on the program curriculums of the: Naval Architecture, Ship Construction and Marine Engineering, and the rest, – in other professions, such as: Electrical engineering, Welding technology, Structural materials technology, Automation of technological processes, etc.

The difficulties and complexity are just in the fact that it takes a lot of time and efforts to renew the training process in the universities of the programs of specialties: Naval Architecture, Ship Construction and Marine Engineering

Given that the training programs in universities of specialties: Naval Architecture, Ship Construction and Marine Engineering usually take about of five years, it requires simultaneous training of around one and half to two thousand students of twenty – twenty five programs in the five years teaching, except of the general scientific programs for prior studying

If in particular the training is done in two universities in the Far East Region of Russia, that the number of students will be proportional between the universities

And the partnership with the universities abroad is needed

41 THE RECOMMENDED TRAINING CURRICULUM FOR TEACHING IN THE UNIVERSITY OF NAVAL ARCHITECTURE, SHIP CONSTRUCTION AND MARINE ENGINEERING

(88) Do not specifically concern the field of Naval Architecture as the architecture of the combat vessels but as the sequence of programs for study of the design processes for and within the construction of any ships, predominantly merchant

It requires the unified general approach of the composition of training programs in the universities in Russia and in other countries for training of the professionals for shipbuilding industry

The Curriculum was done as the most general preliminary pattern for organizing of training of bachelors and masters in the holistic frameworks for common use and for further development

The basic data for the Curriculum forming are taken from:

A. the textbooks available in Russia for training of the profession of Ship Construction

B. the general list of programs for teaching programs of the professions Naval Architecture and Marine Engineering in the USA (University of Ann Arbor, MI)

C. the Training curriculum of Ministry of Education of Russia for teaching of professionals of Ship Construction and Marine Engineering

D. recently published in North America textbooks for professions of Naval Architecture and Marine Engineering, which are available and the main publisher is usually the professional Society of Naval Architects and Marine Engineers (SNAME)

E. the personal scientific and teaching experience and personal opinions when use the data from the issues defined ahead with the purpose to combine the useful and laconic Training curriculum, which would satisfy: the modern level of industry and science the principles of the Bologna Process, etc.

preserving the integrity and depth of the programs, and unnecessary programs are not plan to include

42 (89) www.name.wealth-marine.com

The developed version of the Training curriculum is available online as core guides for teaching of students in the Naval Architecture, Ship Construction and Marine Engineering

The list of books available in North America is in the text, if scroll down slider on the right

43 (90)

THE STRUCTURISATION OF THE TRAINING CURRICULUM FOCUSING ON THE CORE PROGRAMS AND ON THE FINAL PROGRAM

(91) It should be noted that, of the twenty or twenty five advised programs in the Training curriculum of Naval Architecture, Ship Construction and Marine Engineering the least preliminary efforts to start the teaching process require the Core and technological programs: Core of ship classification, structure and seaworthiness Shipbuilding technology Marine propulsion systems with internal combustion engines Structure of ship’s hull (see the Training curriculum online) which on the other side are the most useful, not so much academic and more technological

Core and technological programs are valuable themselves as for teaching skilled workers for shipbuilding industry and can be used in both in universities and in colleges with the concept of the multi– level training continuity

Core and technological programs are important not only practically but as the part of university education, as well, for the rest of the Training curriculum since the choice of other programs and clarifying the content of other programs depends on the Core and technological programs and on the final programs, which crowned the Training curriculum, such as: Ship design concepts

44 C O N C L U S I O N S

(92) 1. There are two broad alternatives of demand in regard to ships under construction, serving drivers for the development of shipbuilding and replenishment fleet of merchant ships: the market demand in regard to the serial ships and the Federal objectives in regard to the construction of new types of ships, less covered by the serial merchant shipbuilding

2. The advantages for the development of innovative shipbuilding may arise in countries where the serial merchant shipbuilding is not characteristic, in this case the economical competition between the two directions of shipbuilding does not arises within the industry: of the serial merchant shipbuilding and of the innovation construction of new types of ships

3. From an economic point of view it is required for the innovative shipbuilding: the consolidation of demand in respect of merchant ships of the various classes and the Federal Strategy with a reasonable indication of the direction of the Federal support project work and the creation of "lines" of projects and types of the merchant ships, which can be build on the basis of process aimed at consolidating of demand

(93) 4. The investing in improving the shipbuilding industry in Russia logically would be not first in the construction of ships for the Federal needs of Russia, as it is, but into the creation of facilities of shipyards for assembling on the basis of technological partnerships with the available acting shipyards to change them product from complete construction of small o medium-sized ships to the construction of the compartments of ships for the assembling yard and in the development of professional teams of employees for shipyards: their professional training and communities of families development their housing construction and residential infrastructure

5. For the innovative shipbuilding need the technology improvements of ship construction: the introduction of automation of shipbuilding the specializing of shipyards for assembling of modules and for modules innovative construction the technological uniting of the shipbuilding yards on the bases of the assembling yards

The shipyards for assembling are logical to establish in regions of Russia on the new land plots, and convert the available acting shipyards for construction and modules of ships, as the available shipyards are required for production of modules and for technological uniting with the assembling ones

6. Joint participation of Federal Government and private investors in solving the problems of development of innovative shipbuilding determines the overall stages of participation of these parties: the creation of an assembly shipyard using the Federal funding the participation of the private investors and redemption of equity portion of Federal Property as the construction of ships for Federal needs, facing the consolidated demands for innovative vessels specified in the Strategy of development of shipbuilding industry

45 (94) 7. After the logical and reasonable repayment by the private party of Federal share of the created facilities, which in: or costs flow of the Government may be terminated, because united shipyards: the assembling one and it departments or the other yards working for construction of ships modules will be able to participate in the economic competition with the contemporary working shipyards in the mass construction of merchant ships for market demand or costs flow of the Government may be continued for the creation of new centers of shipbuilding, consisting of the assembling shipyard and other shops or yards united with the assembling one, that initially the Federal participation is required as for the investing for shipyards construction for the legislative support of the shipyards establishment and the innovative ships construction and for the consolidation consuming of the innovative ships built

8. In the next the shipbuilding do not require the financial support of Federal Government, it would be organized mass construction of ships in accordance with market demand, and the profit will be invested in the construction of ships for the Federal needs if for created facilities redemption by the private party, like the construction of such classes as: ice navigation tankers and LNG–tankers icebreakers container ships of ice navigation offshore platforms and equipment to work on the Arctic shelf research vessels suitable for navigate in the Arctic the marine engineering for power generation in coastal areas, including from renewable sources the floating equipment for the processing of gas in Arctic

9. Ships for the Federal needs in accordance with the Strategy of with another Federal decisions could be constructed as parallel production at the expense of profits from the serial construction of ships for the market demand While delivering of the built ships for Federal needs the private investors are gradually buying out the facilities of shipyards constructed and equipped jointly with Government

46 (95) 10. Can be obtained the following results of the discussed ahead tasks of the Strategy working out in the Far East of Russia: the establishment of modern shipbuilding industry based on the cooperation of shipyards aimed to meet the market demand for ships series, which are to be assembled of modules, manufactured with automated complex technology the refund of Federal subsidies for shipbuilding facilities by investing in the construction of ships for Federal needs of the profits of ships mass construction for market demand the transfer to the investors of the ownership for new shipbuilding facilities while constructing ships for the Federal needs and while gradual refunding of part of the Federal property in shipyards by private parties

7,500 new jobs (from 5,000 to 8,000) in the shipbuilding industry and the satisfaction of social needs of the employees who, in turn, had fulfilled the obligation to repay of Federal subsidies for social development, professional training and creation of required residential infrastructure the development of science and education system for the professions of Naval Architecture, Ship Construction and Marine Engineering

11. The total Federal subsidies in the development of merchant shipbuilding in the Far East of Russia multiple, possibly few times of the planned and can be as high as 40 bln. US dollars equivalent, like the expert opinion, very rough

This factors and leverages consist of: the investing in shipyard «Zvezda» the investing in shipyard «Vostok» (expecting in future) the impact in the shipyards investments of the shipbuilding Federal contracts revenues the legislative support factor (2 3 – fold) the private investors’ participation factor (2 3 – fold)