Australia is on track to select the Japanese Soryu-class submarines to replace its aging Collins-class submarines in a potential $20 billion deal for 10 to 12 boats, according to a Monday report by the Australian news service, news.com.au.

Citing unnamed government sources, the report says the government of Prime Minister Tony Abbott will announce a deal for the diesel electric attack boats (SSKs) by the end of the year to replace the six domestically built Collins-class — due to retire by 2026.

“The Government cannot afford a submarine capability gap and every day past 2026/27 when Collins class is due to begin decommissioning, adds days of risk,’’ a defense source told news.com.au.

The news follows a July agreement between Japan and Australia to partner on marine hydrodynamics ahead of a replacement for the Collins-class boats and a recent reinterpretation of the Japanese 1947 pacifist constitution that allows Japan to enter collective defense arrangements.

The partnership quickly evolved into Australia buying the submarines outright.

An export deal for the Soryu-class SSKs would be a major step forward in foreign military sales (FMS) for Japan and a blow to the Australian shipbuilding industry that built the original Collins.

The Abbott government has said previously it would build the Collins replacement domestically, but the poor track record of government-owned ASC Pty Ltd (originally Australian Submarine Corporation) in constructing the late and over-budget Hobart-class destroyer for the Royal Australian Navy (RAN) made it easier for the Abbott government to move ahead with a purchase of the Soryu boats.

ASC will likely pickup maintenance contracts for the Japanese built SSKs.

The Soryu design — built by Mitsubishi Heavy Industries and Kawasaki Heavy Industries — is considered among the most advanced and largest non-nuclear attack submarine in the world. Displacing about 4,200 tons submerged, the submarine is powered by a series of four Swedish Sterling V4-275R air independent propulsion (AIP) units that allow the ship to operate its diesels without the need to surface or snorkel.

Though the deal seems likely, neither Australian nor Japanese officials would comment on the report.

“No decisions have yet made on the design and build of the next generation of Australian submarines,” a Austrailian Defence Ministry spokeswoman told news.com.au.

The spokeswoman said more clarity would be in the Australian defense white paper — a strategic planning document due out later this year.