VILNIUS, Lithuania (AP) — Lithuania signed a deal with U.S. ammunition producer Northrop Grumman on Monday as it seeks to increase defense capabilities in the shadow of Russia's war in Ukraine.

Prime Minister Ingrida Simonyte and Steve O’Bryan, the company's vice president, met in the Lithuanian capital of Vilnius to formalize the agreement on the development, production and supply of medium-caliber ammunition in the southernmost Baltic country.

Simonyte told reporters after the signing ceremony that the project "will create clear value for Lithuania and for our region as a whole.”

Lithuania, which borders Russia’s Kaliningrad exclave to the west and Belarus to the east, remains the largest buyer of U.S. arms among the three Baltic states with more than 1.3 billion euro ($1.4 billion) worth of acquisitions in the near future, according to the Defense Ministry. Northrop Grumman is a leading producer of 30mm ammunition.

The government in Vilnius in June signed an agreement with Rheinmetall, the German arms manufacturer, to build a 155mm mortar shell plant in Lithuania. The 180 million euros ($195 million) project is expected to create more than 150 jobs and produce tens of thousands of rounds annually.