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By John Helmer, Moscow

The Russian government has forced the chief executive of the state-owned United Shipbuilding Corporation (USC) to resign. Andrei Dyachkov, who was appointed to run the shipyard holding in June of last year, signed a letter of resignation on April 30, and then took sick leave. He is reportedly in hospital for Soviet reasons – he needs to be isolated not from germs, but from his rivals.

The affair has been leaking into the press slowly for weeks, and was accelerated last month when Dmitry Rogozin, the deputy prime minister in charge of the military industrial complex, gave Dyachkov a public dressing-down. But the real power behind the shove into Dyachkov’s back, according to sources close to the shipyards, is Igor Sechin, currently chief executive of Rosneft and formerly chairman of the USC board. Dyachkov is not the first to be ousted by Sechin. Roman Trotsenko was ousted in June 2012. Before him, Sechin got rid of Alexander Buzakov in November 2009, and others before that. Their tale was told here. Indeed, the only continuity in supervision of Russian shipbuilding since 2008, according to an official close to Sechin, has been Sechin himself.

“Pay attention,” Rogozin told Dyachkov on April 13, “and tear off heads of those who send me” misleading information. Rogozin, an influential politician who served in the State Duma until he was appointed as Russia’s chief representative to NATO between 2008 and December 2011, is a novice in the shipping industry. In the wake of his attack on Dyachkov, there was no official response from USC. But a USC source claimed the company was unsurprised by the high-level criticism. It had heard it all before during Trotsenko’s time. It seemed, the source implied, that there would be no repercussions from Rogozin’s attack.

One of the targets of Rogozin’s attack was the rebuilding of the Zvezda shipyard at Bolshoi Kamen, across Ussuri Bay from Vladivostok. The complex had been a naval submarine yard until the government in Moscow decided on conversion to civilian use, and expansion of non-military construction to supply the requirements of the oil and gas boom in the Russian sector of the Sea of Japan and Sea of Okhotsk. USC then acquired the majority of the port company shares, and negotiated a joint venture with Daewoo Shipbuilding and Marine Engineering (DSME) for a $200 million investment to build tankers, LNG carriers, and drilling platforms with displacement of up to 350,000 tonnes.

This has been one of Sechin’s priorities since the Russian and South Korean governments agreed in 2009 to participate in the project. On June 3, 2010, Sechin presided at the signing of a joint venture between USC and DSME at the Zvezvda complex. The latter issued a release explaining that “with this contract, DSME will construct state-of-the-art shipyard facilities such as a dry dock and a Goliath crane. The yard will be extended by 1 million square meters to take up 1.6 million square meter of land in order to build Large commercial vessels and offshore plants. DSME expects to secure new orders from Russia through this agreement by agreeing to continue building vessels for the Zvezda shipyard.” In the photograph, Sechin is on the left, Trotsenko in the centre.

Note that the Koreans expected that as part of the Zvezda deal their yards in Korea would also benefit from Russian vessel orders. That hasn’t happened yet. Neither has DSME begun their investment in Zvezda, USC has been going it alone.

The new Zvezda production line began to work on the keel and hull components of an icebreaker tanker for Rosneft in December 2011. In March of this year, an inspection of the new facilities by the Kremlin’s minister for the fareast, Victor Ishaev, a former governor of Khabarovsk, concluded with Ishaev’s confident forecast that the new plant would be commissioned this year. “There is no doubt about the facility commissioning date; they’ve already done a lot of work. Our task now is to support the construction, address the challenges related to various institutions and aid in establishing a new production facility. We do not just monitor the progress on the President’s instructions but have to mutually decide how to implement the instructions of the head of the state to create one of the most cutting edge shipyards in Russia in time and to a good quality.”

Officially, USC denies the construction at Zvezda has been delayed. “Fundamentally, there is nothing new to say,” responds USC spokesman Alexei Kravchenko. “We do not comment on the slowness of construction at the shipyard because there is no [slow construction]. There is no construction schedule in any official document at the government level, at the level of the corporation, for which we could have been asked [to meet].”

Off the record, other USC sources believe the accusations against Dyachkov have been trumped up. They add there has been a significant delay in the award of state funding for the project. Until now, according to USC, no state money has been involved in the Zvezda project, and so the construction schedule has not depended on what Rogozin or other government officials, or Rosneft would like, because they are not paying the costs, nor underwriting the loans taken to finance the project to date. “USC”, said Kravchenko, “has requested to advance by two years the start of state funding for the planned shipyard at Bolshoi Kamen from 2016. That means that next year [we] would receive at least the first state money, which allow us to give the process a more or less steady pace of development. Obviously, the schedules will be attached to it.”

Rogozin is not commenting on the ouster of Dyachkov. His last message to followers of his Twitter site, dated May 5, is a greeting on the occasion of the Orthodox Easter holiday. Rogozin ends with the traditional Russian, “Christ is risen”.

Dyachkov, a career shipbuilder and veteran of the Sevmash submarine yard in Severodvinsk, took over at USC from Roman Trotsenko, after he was ousted suddenly himself. Like Trotsenko, Dyachkov has been under pressure from the Russian Navy and Rosoboronexport, the military exporter, for trying to raise prices for naval vessel orders.

Before the latest attacks on Dyachkov, Trotsenko was also criticized for the slowness in commissioning the new super shipyard at Kronstadt [St. Petersburg] and the Zvezda shipyard. For what Trotsenko did to deserve his promotion by Sechin to USC, his management success and failure, and the circumstances of his dismissal, read this.

The Moscow newspaper Kommersant reports that Dyachkov’s ouster came after months of clashes of personality and policy between Dyachkov and executives introduced at USC by Rogozin, as well as with Sechin, and also with Trotsenko who was engaged by Sechin as his adviser after he left USC to Dyachkov. A Russian shipping veteran describes Dyachkov as “an industry professional [who] knew how to build ships. But he was quite weak in the bureaucratic wars and in dealing with people like Rogozin, who knows nothing about how to build ships and submarines.”

As for what will happen next, the source says: “There is only one outcome — we will soon see the funeral of Russian shipbuilding.”

Another veteran of Russian shipbuilding agreed to speak anonymously, confirming the consensus in the shipbuilding sector that Dyachkov is being blamed for Trotsenko’s failures. “Trotsenko launched all these futuristic, phantasmagoric projects to build shipyards — Zvezda shipyard in the Far East and in Kronstadt, St. Petersburg. He started projects and Sechin, even when he was in government, was sceptical, so he sent his men out to check. But as Trotsenko is a very talkative, a PR man, he can sweet-talk just about anyone. So he convinced everyone that everything was being built, that everything was fine.”

“When Trotsenko went to Rosneft with Sechin, Dyachkov was engaged to shovel out these Augean stables. He was trying to understand, to assess the effectiveness, the appropriateness of the project and see what is built. So when Rogozin ran over him… in fact, these claims about delays in construction time – they are not claims against Dyachkov. In essence, these are claims against the project itself, and by and large against Trotsenko who created these projects.”

The source believes Trotsenko is also behind the ouster of Dyachkov because he is hoping to promote schemes for a new Rosneft fleet of gas carriers and large oil tankers, for which Zvezda is necessary.

“Maybe he convinced Sechin and said that wewill now build ourselves a fleet, a fleet like Sovcomflot’s, and all will be well.” Dyachkov got in the way of Trotsenko’s “dream. Dyachkov can be understood – he was sitting quietly doing the business. Naturally, Trotsenko does not like Dyachkov, to put it mildly… It was an unpleasant coincidence for Dyachkov, the political circumstances and the strategic role the head of USC must play. Dyachkov cannot be a politician. He stuck to shipbuilding as much as he could. This was the route to his resignation.”

As for the candidates to replace Dyachkov, the source dismisses some for promoting themselves already in the press. “The new man, who will come to the place of Dyachkov will get all of these problems again because they have not been solved. Most likely the [new person] will play by the rules set by Trotsenko again and with him Sechin.”

There was no response to requests for comment from Rosneft.

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