The 1.2-billion-euro ($1.3-billion) deal for France to supply the two Mistral warships was suspended last November after Western countries imposed sanctions on Moscow for its annexation of Crimea and backing of separatists in eastern Ukraine.

Russia had made an advance payment of about 840 million euros for the ships under an agreement reached with former President Nicolas Sarkozy in June 2011.

"Discussions are under way," French President Francois Hollande said on Friday. "I will make a decision in the coming weeks."

The first of two ships, the Vladivostok, was supposed to be delivered to Russia in November 2014 but it remains at the shipyard in Saint-Nazaire in western France. The second ship was due for delivery this year.

Russia all clear

Vladimir Kozhin, the military and technical cooperation adviser to Russian President Vladimir Putin, said on Thursday evening that "the negotiations are completely finished, everything has already been decided, both the time frame and the amount."

"I hope we will sign the agreement on the termination of the contract as soon as possible," Kozhin added.

Reports in Russia's "Kommersant" daily newspaper have suggested France will compensate Russia for 1.16 billion euros. Russia has specially trained about 400 sailors, built port infrastructure in Vladivostok for the ships and developed prototype helicopters.

Relations between Russia and France have been strained over the deal. Last June, US President Barack Obama called on Paris to "press the pause button" on the deal.

jm/cmk (Reuters, AFP)