The Australian Department of Defence has signed a contract worth at least A$3bn ($2.42bn) with German shipbuilding company Lürssen in support of the Royal Australian Navy’s (RAN) offshore patrol vessels (OPVs).

The company will be responsible for leading the design and development of 12 OPVs under the arrangement.

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Defence Industry Minister Christopher Pyne said: “This contract signature demonstrates the Turnbull Government’s commitment to keeping on schedule and supporting Australian industry.

“The vessels will be delivered by Australian workers, in Australian shipyards using Australian steel.”

The Australian Navy OPV project is expected to generate approximately 1,000 new job opportunities, including 400 direct jobs and a further 600 opportunities across the supply chain.

"The Australian Navy OPV project is expected to generate approximately 1,000 new job opportunities, including 400 direct jobs and a further 600 opportunities across the supply chain."

It will also help preserve and improve the shipbuilding skills required for the development of the navy’s future frigates.

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The first two of the 12 patrol vessels will be constructed at the Osborne Naval Shipyard in South Australia, while the remaining ten ships will be built at the Henderson Maritime Precinct in Western Australia.

Pyne added: “The OPV project is part of the Turnbull Government’s A$89bn ($71.89bn) continuous shipbuilding programme, which will deliver 54 new vessels to address the regional and global threats in the decades ahead.”

Construction work on the first two OPVs is slated to begin this year and the remaining vessels are scheduled to be constructed from 2020.

Shipbuilding firm ASC is set to be subcontracted by Lürssen for the construction of the two ships.

It is also currently in negotiations with Austal and Civmec for the development of the remaining OPVs.

The vessels are expected to help protect the country’s borders once operational, in addition to delivering increased range and endurance for the RAN compared to its existing fleet of patrol boats.