Philippine Navy Austal’s Offshore Patrol Vessel
Philippine Navy Austal’s Offshore Patrol Vessel

Austal Loses Philippine Navy Offshore Patrol Vessel (OPV) Acquisition Project

The Philippine Navy decided to sole-source foreign-built Offshore Patrol Vessels rather than having Austal build them the Cape-class based OPV in their local shipyard in Balamban, Cebu. Australian shipbuilder Austal’s proposed $600 million sale of patrol vessels to the Philippine Navy had cleared a major hurdle after Manila agreed to resume loan negotiations with countries that backed a United Nations probe of President Rodrigo Duterte’s drug war.Defense Secretary Delfin Lorenzana lobbied for Australia’s exemption from the loan ban. This acquisition project was being negotiated with Austal under a Government-to-Government deal between the Philippines Department of National Defense and Australian Department of Defence.

Australia has been keen to fund the project, which seeks to bolster the Philippine Navy’s patrol capability in the disputed South China Sea, much of which is claimed by Beijing. Canberra’s financial backing will also support Austal, which has tendered for the contract. In October, Lorenzana said he wanted the project to begin this year to generate more local jobs. Austal plans to build the vessels at its yard on the central Philippine island of Cebu. The company is also looking to expand in the Philippines. Austal, which specializes in passenger and military ships, and U.S. private equity fund Cerberus Capital Management are in a joint bid to take over the bankrupt Hanjin shipyard shipyard in Subic Bay, a former U.S. naval base which opens to the South China Sea.

Philippine Navy OPV

Austal submitted a proposal to the PN based on a for a larger, more capable variant of Cape-class vessels that are currently in operation with the Australian Border Force and Royal Australian Navy, and that was recently announced by the Government of the Republic of Trinidad and Tobago as its next maritime protection asset. The Cape class is a ship class of 18 large patrol boats operated by the Marine Unit of the Australian Border Force, the Royal Australian Navy (RAN) and the Trinidad and Tobago Coast Guard. Improved Cape-class vessel is a circa 80 m steel OPV, which includes a dedicated helicopter flight deck and the latest technology in naval systems including Austal’s MarineLink ship control system and ride control technologies.

Austal acquired its Philippine shipbuilding business in 2012 for about AUD10 million (USD7.2 million). In May 2018, Austal said it would invest USD18 million to expand these facilities, trebling its capacity and enabling it to build larger vessels. The expansion is expected to complete in 2019. It would be the first time Austal has built defence vessels in the Philippines, which to date has produced commercial ferries. Austal’s defence work has been carried out in Henderson, south of Perth, and at its US facilities in Mobil, Alabama. Based in Henderson, Western Australia with shipyards in Australia, USA and Philippines, Austal has delivered over 255 ships to more than 100 operators in 44 countries since 1988.

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