Swedish defense firm Saab (SAABb.ST) has submitted a bid to build new submarines for the Australian defense ministry, Swedish media reported.

Australia is currently mulling options to update its submarine fleet. The country was leaning toward buying as many as 12 off-the-shelf stealth submarines from Japan in a deal that would net it a major portion of Australia's overall A$40 billion ($34.3 billion) submarine program.

But strong interest from European manufacturers willing to build submarines in Australia, a scenario that would bolster the country's anemic manufacturing sector and mollify the government's blue collar critics, is making a fully overseas purchase a hard sell.

Now Sweden's Saab, which offers both to export finished submarines or to build them with partners in Australia, has officially entered the race.

"Last week we submitted a written, firm offer to join their submarine tender," Gunilla Fransson, head of Business Area Security and Defence Solutions, told Swedish business daily Dagens Industri.

"The Australian customer has said they want this for 20 billion Australian dollars. We have said that we can meet their target," Fransson said.