THE revival of North-East shipbuilding giant Swan Hunter is continuing with plans to expand into a disused yard.

Company chairman Jaap Kroese wants to lease the mothballed Neptune yard, at Low Walker, Newcastle, to increase its offshore capability, leaving the main Wallsend site free to solely concentrate on Ministry of Defence (MoD) work.

Swans has already landed a £150m MoD contract to construct two landing vessels, bringing 2,000 jobs, but Mr Kroese is keen to figure strongly in the Royal Navy's future building programme, featuring up to 20 frigates and eight destroyers over the next 20 years.

Mr Kroese outlined plans to Neptune yard owner, Newcastle City Council, yesterday, and hopes to agree a leasing arrangement within the next fortnight.

He revealed he has not ruled out moving on to the Kvaerner site at Teesside, but his preferred option is to remain close to Swans' traditional home on the Tyne.

Mr Kroese said: "We have been in the offshore construction business for the last 30 years, but we don't have the space any more.

"We are looking at the Neptune yard to do offshore construction work. I either want to lease it or rent it, we are willing to invest into the yard, but we don't want to pay a big price for it."

Mr Kroese said without the extra construction capability the Neptune yard would provide, it would not be possible to bid for much of the MoD work. He believes it could lead to an extra 200 to 300 jobs if more offshore work is won in the short term.

Brian Ham, the city council's director of enterprise, environment and culture, said the authority is "thrilled" at the on-going success in shipbuilding and offshore supply work on the Tyne.

He said the council is keen to reach an agreement with Mr Kroese, although he added that the yard would require significant investment to bring it out of mothballs.