The current situation around Crimea risks disrupting the largest Ukrainian-Chinese warship building contract worth around $350 million, a source in the Ukrainian defense sector told Interfax.

Due to the events in Crimea, the implementation of the contract for construction of small Landing Craft Air Cushion (LCAC) at the facilities of FSK More in Feodosia for China remains an open question, the source said.

"Despite the fact that Ukraine has successfully performed its part of the contract for construction of the first two ships at the facilities of FSK More, and has already handed them over to the customer, the question of China's payment for the second small LCAC shipped to China in early March remains open," the source said.

"At the same time, the force-majeure will require additional agreements with China and, probably, with Russia too, over the format of further cooperation under the contract that includes construction of two more small LCACs in China with participation of Ukrainian specialists," the source said.

"Being a reliable international-cooperation entity in the sphere of military-technical cooperation, Ukraine confirms its obligations under the contract," the source said. "Regrettably, their performance is currently compounded" by the situation around Crimea, he said.

In 2009, Ukraine and China signed a contract for construction and supply of small LCACs. The contract is estimated at around $350 million, according to source in the Ukrainian defense sector. Four ships were to be built and shipped under the contract: two in Ukraine and two in China with participation of Ukrainian specialists.

The first LCAC built in Ukraine was handed over to the customer in April 2013, the second in early March.

The LCAC is capable of carrying 150 tonnes of cargo, including up to three medium-sized tanks or up to 500 airborne troops. It can move at a speed of up to 60 knots (about 120 kilometers per hour) on land, by air, and on ice, and overcome vertical wall-type barriers 1.5 meters high. The landing craft is fitted with five gas turbines, each with a five-horsepower capacity.

The first LCAC handed over last year has already entered service in China, according to open sources.