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Russian military officials told British warship HMS Defender to 'change course or we'll fire' as it neared disputed waters, a journalist aboard has claimed.
Russia claims its military fired warning shots at the HMS Defender and dropped bombs in its path.
But the UK has flatly denied any claims of a confrontation and the assertion that the ship left Russian waters soon afterwards, "having ventured as much as 3 kilometres (2 miles) inside".
Russia has since released footage which it claimed was the British defence attache being summoned to hear a protest from Vladimir Putin’s defence ministry. Britain has not commented on the video.
The dispute is likely to centre on the Black Sea around annexed Crimea – a territory both Russia and Ukraine lay claim to.
The British destroyer was reportedly issued with a warning as it entered the 12-mile limit of Crimea's territorial waters near Cape Fiolent, in the Black Sea, shadowed by Russian vessels and aircraft.
Russia claimed the footage showed a British attache been called in to discuss the 'incident'
Defence correspondent Jonathan Beale, who is aboard HMS Defender, claimed the British warship's crew were ready with weapons systems loaded as they approached the southern tip of the peninsula, while Russia issued verbal warnings.
He told the BBC : "Increasingly hostile warnings were issued over the radio – including one that said 'if you don't change course I'll fire'.
"We did hear some firing in the distance but they were believed to be well out of range."
According to the Mail Online, HMS Destroyer's Captain Vincent Owen described the mission as confident but non-confrontational as his ship made its way to an internationally recognised shipping lane.
But Mr Beale claimed its course was a "deliberate move to make a point to Russia".
The UK and much of the international community do not recognise Russia's sovereignty in the region.
The Crimea crisis saw Russia expelled from the G8 – which is consequently now the G7.
A statement from the British Ministry of Defence issued Wednesday reads: "No warning shots have been fired at HMS Defender.
"The Royal Navy ship is conducting innocent passage through Ukrainian territorial waters in accordance with international law.
"We believe the Russians were undertaking a gunnery exercise in the Black Sea and provided the maritime community with prior-warning of their activity.
The UK side flatly denies any warning shots were fired at the HMS Defender
"No shots were directed at HMS Defender and we do not recognise the claim that bombs were dropped in her path."
Russia released a short video of its officials appearing to summon the UK military attache over claims a UK warship entered waters it lays claim to.
The clip was released on Russia's state television, claims to show the British military attache meeting officials from the nation's ministry of defence.
The ministry’s TV channel Zvezda reported the claims. It said: “The Black Sea Fleet together with the FSB (security service) stopped a violation of the Russian border by a British destroyer Defender.
The short clip was posted online after being showed on Russian state television
“Today, at 11:52, the Defender crossed the state border of Russia in the northwestern part of the Black Sea.
“It entered the territorial waters for three kilometres, in the area of Cape Fiolent.
“Previously warned about the use of weapons in the event of a violation of the border, the British ship did not react to this in any way.
“At 12:06 and 12:08, a Russian border patrol ship fired a warning shot.
The HMS defender's route through the Black Sea
“At 12:19, the Su-24M aircraft of the Black Sea Fleet performed a warning bombing, dropping 4 OFAB-250 bombs on the course of the destroyer.
“At 12:23 the British destroyer left the borders of the territorial sea of Russia.”
The UK's Defender had earlier visited Ukrainian Naval port Odessa before the claims of the confrontation.
The destroyer had been on operations in the Black Sea with American navy guided missile destroyer USS Laboon and Dutch warship HNLMS Evertsen in a show of support for Ukraine following President Vladimir Putin’s recent vast military build-up close to Ukrainian borders.
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Russia has said in recent days that it was closely monitoring HMS Defender.
An earlier image taken from the warship showed Russian frigate Admiral Essen "shadowing" USS Laboon.
Russia’s national defence control centre said: "Forces and systems of the [Russian] Black Sea Fleet have started monitoring the movements of the Royal Navy HMS Defender and the Dutch Navy's Evertsen frigate.”
The fleet’s former commander Admiral Vladimir Komoyedov said: ”Those ships will definitely not be welcome here.
“No-one is going to greet them as guests of honour, while their actions will definitely be monitored.
“They will be put under direct surveillance, technically, from the air and from outer space.”
The Russian fleet was enhancing “its combat preparedness, especially the readiness of air defence crews and particular standby forces” with the presence of the NATO ships, he sdded
They were being subjected to “close monitoring”.
"Their visits to the Black Sea have become too frequent,” said Komoyedov, also suggesting their presence had gone "too far."
The USS Laboon is in the Black Sea “to conduct maritime security operations in the region”, the United States Sixth Fleet said on Twitter.
The destroyer is capable of carrying up to 56 Tomahawk cruise missiles.
Russia claims warning shots were fired at Royal Navy warship in the Black Sea
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Last month General Vladimir Kulishov, deputy director of the FSB security service, claimed Royal Navy destroyer HMS Dragon had to be “expelled” by the Russian's after “warnings” not to enter “Russian territorial waters” off annexed Crimea.
British sources flatly denied the FSB claim which related to an incident in October last year.
"The Russian Federation Navy did not impede HMS Dragon’s passage," a Ministry of Defence spokesperson said.
"She navigated without incident, exercising our right of innocent passage under the UN Convention on the Law of the Sea.
“HMS Dragon was taking the most direct route between two port visits, navigating a recognised safe route for all international shipping within Ukrainian waters.”