Acquisition of Zvezda Shipyard Falls Through Due to Funding Issues

Russia’s second-largest lender, VTB, had plans to acquire the Zvezda shipbuilding yard from Rosneft, but the deal has fallen through. VTB’s United Shipbuilding Corporation (USC) was unable to secure the necessary financing for the acquisition, as confirmed by VTB CEO Andrei Kostin. USC, which is currently managed by VTB, is Russia’s largest shipbuilder, with a network of shipyards, design offices, and repair yards employing 95,000 staff.

In December of last year, VTB announced discussions with Rosneft regarding the acquisition of Zvezda, emphasizing the benefits of consolidating shipbuilding assets under USC. However, Kostin revealed that the evaluation process has been terminated, and the deal is off the table. USC lacks the funds required for the acquisition, leading to the decision to discontinue negotiations. Despite this setback, USC’s effective owner will continue to oversee operations.

Zvezda shipbuilding yard is known for its advanced capabilities, specializing in the construction of large Arc7 ice-class tankers designed to navigate through thick ice. This is particularly important for transporting liquefied natural gas (LNG) from Arctic projects. Russia is eager to enhance its shipbuilding industry, especially in light of sanctions imposed by Western countries following its military actions in Ukraine. These sanctions have limited Russia’s access to advanced vessels and maritime equipment from Western manufacturers.

Overall, the failed acquisition of Zvezda by VTB highlights the challenges faced by Russia’s shipbuilding sector in securing financing for strategic investments. Despite setbacks, the country remains committed to developing its shipbuilding capabilities to reduce reliance on foreign suppliers.

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