Greece and Germany appear set to make some headway in solving a long-running dispute over the delivery of four submarines, but the fate of a shipyard west of Athens remains in doubt following a high-level meeting last week.

Defense Minister Evangelos Venizelos held talks with ThyssenKrupp Marine Systems CEO Hans Christoph Atzpodien in a bid to resolve the issue of the outstanding submarine order, which has weighed heavily on Greek-German relations in recent years.

Greece has identified technical problems with the Type 214 diesel-electric submarine, manufactured by ThyssenKrupp, as being the reason for not accepting delivery of the four vessels that it ordered between 2001 and 2005.

The first submarine, dubbed Papanikolis, has been docked in Kiel since 2006.

There was an agreement to build three of the submarines and refurbish another three at Hellenic Shipyards, west of Athens.

Sources said that ThyssenKrupp appears determined to quit its involvement in the shipyards as early as next month, despite government concerns about the job losses that this might cause.

There were, however, discussions between the two sides about how some private involvement in the shipyards could continue.

Venizelos and Atzpodien are also said to have reached an agreement on the first submarine.

An unidentified third country is reported to be interested in buying the vessel and the two sides have agreed that selling it would be the best way out of the current impasse.

The two men reportedly agreed that if the technical problems are ironed out, Greece will accept delivery of the remaining three submarines.