Construction of the Varyag started in December 1985 at Nikolayev, and the ship was launched in November 1988. The Varyag was intended to be the second ship of the class, but in late 1991 the Defense Ministry halted financing, and construction work was halted in January 1992. In 1994 Russia declined to resume the Varyag's construction, which was 70 percent complete. The total estimated cost of the ship was about US$ 2.4 billion, and more than US $500 million was needed to complete her construction. Further complicating matters was the fact that many of the ship's equipment systems reached their planned operational life limits by the end of 1997. The government of Ukraine decided in June 1994 to scrap the vessel, after unsuccessful attempts to sell it of Russia, China or India.

Ukraine began trying to sell the ship, and talks with Chinese and British companies were held in 1995. However, it was hard to find a customer. The sale of Varyag for US$20 million was announced on 17 March 1998 for conversion to an entertainment complex and casino. The Chinese company -- Agencia Turistica e Diversoes Chong Lot Limitada, a small company registered in Macau -- agreed that the ship would not be used for military purposes, which reflected the fact that much of its equipment had either never been installed or had been already been removed.

However, since July 2000 Turkey rejected repeated requests to let the Varyag pass through Istanbul's crowded Bosphorus strait. The coastguard was on alert, citizens were told, lest it try to ''slip through''. For Varyag to pass with escort tugs, the strait separating Asia and Europe might have to be closed to other traffic. In early December 2000 Turkey barred the Varyag from passing through the Bosphorus straits, saying its passage would breach the 1936 Montreux Convention, which regulates use of the waterway. As of early 2001 the Varyag was off the coast of Bulgaria, under tow by a tug manned by a Chinese crew. It remained anchored in the Black Sea for months awaiting a go-ahead. Turkey allowed the Varyag to pass through the Bosphorus in October 2001, after China pledged to pay for any damages that might result. The Varyag reached the Chinese port of Dalian in February 2001 for a refit into a floating casino and hotel, before being towed to Macau.