Severnaya Verf, the project's main constructor, has been accused by the Baltiisky factory -- which is due to build the ships' boilers -- and its owner IST group of violating a contract by delivering used equipment.

"The contract was broken -- the situation is catastrophic," IST president Alexander Nesis told journalists.

He accused Severnaya Verf's owners -- Mezhprombank and industrial holding NPK -- of using a "criminal strategy" in attempting to unload "scraps that have been stocked away for 15 years."

The owners had sold off a used engine and steam generator while insisting they were new, Nesis said, adding that the parts came from old ships decommissioned from the Russian navy.

The IST group and the Baltissky factory, in Saint Petersburg, "refuse to share responsibility for this equipment, which may cause victims," according to a statement released at the press conference.

"In these conditions, we cannot deliver our equipment," Baltiisky chief Oleg Shuliyakovsky said.

Factory officials declined to give details of the China deal.

WAR.WIRE