Australia will pay hundreds of millions of dollars in compensation to the French shipbuilder Naval Group to repair relations with Paris following the cancellation of a multibillion-dollar submarine agreement last year.

Saturday, Australian Prime Minister Anthony Albanese said that Canberra would pay $583 million in compensation, equivalent to 555 million euros.

With the support of the Albanese party, Australia's past government canceled a $66 billion deal with France for conventional submarines. It forged a security alliance with the United Kingdom and the United States.

The AUKUS alliance, which aims to offset China's strength in the Indo-Pacific area, will grant Australia access to U.S. nuclear submarine technology.

Albanese stated, "The way that decision was handled has caused enormous tension in the relationship between Australia and France,"

"France is an important ally, an ally that we have a history of fighting alongside in two world wars and an ally that has a significant presence in the Pacific at a time when tension in the Indo-Pacific means that we need to work with our partners."

The settlement will end the contracts, according to Albanese, who added that certain specifics would remain confidential.

In addition, he stated that the deal was the result of discussions with French President Emmanuel Macron, whom he congratulated for "the cordial way in which we are reestablishing a better relationship between Australia and France."

Since assuming office a month ago, Albanese has sought to restore the French-Australian relationship and rebuild confidence.

Macron called Albanese's predecessor Scott Morrison a liar after the decision to reject the accord was made last year, and Paris's envoy to Australia stated that ties had reached an all-time low.