Naval Force about plans for the recapitalisation of its Eastern Fleet, chief executive Andrew Bellamy has disclosed to IHS Jane's .

Speaking during a visit to Austal's Mobile, Alabama, facilities for the christening on 13 June of USS Gabrielle Giffords (LCS 10), the third of 10 Littoral Combat Ships (LCS) being constructing there for the US Navy under a USD3.5 billion contract, Bellamy suggested the Saudis were leaning towards the same type of vessel.

"It's my belief that ultimately the Saudi navy will operate an Austal-style concept, which will be an aluminium multi-hull," he said.

The Saudi requirement represents a major opportunity for the struggling Australian naval shipbuilding sector, which despite excellent skills and overcapacity has not pursued exports due to an expectation that facilities would be filled by government contracts, said Bellamy.

Notwithstanding the size of the opportunity, Saudi ships could be built at the company's West Australian shipyard and the existing ASC shipyard - currently state-owned - in Adelaide, or by a combination of Adelaide and Austal's Mobile facility.

However, should the customer want ships built in the US via a government-to-government relationship "we'd likely do that", said Bellamy.

A perception that building ships in Australia involves a cost premium of 30% to 40% is a myth, he said. With the Australian dollar at USD 0.75-0.80, the Joint High Speed Vessels (JHSV) under construction for the US Navy in Mobile and similar high-speed support ships being built for the Omani Navy at Austal's West Australian facility near Perth are similar in cost, he said.

Illustrating the structural problems facing the domestic shipbuilding sector, BAE Systems Australia confirmed on 16 June that it would not compete for an Australian-funded AUD600 million (USD468 million) project to build 21 patrol boats for Pacific nations.

Such small, non-complex vessels would not assist the company in retaining many of its core shipbuilding capabilities, BAE Systems Australia said in a statement.

Without new orders, the 800-strong workforce at the BAE Systems Australia shipyard at Williamstown in suburban Melbourne would be without work from early in 2016, it disclosed.