The crucial part of Putin’s machine and how British corporations keep Russian gas flowing into Europe

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By Creative Media News

  • British firm aids Russia’s LNG trade
  • Europe’s covert reliance on Russian gas
  • Sanctions loopholes fuel ongoing conflict

The Yakov Gakkel tanker sails between Siberia and Europe in winter and summer and contributes to the continent’s never-ending gas supply.

This is the story of how an insignificant company located in an office block on a quiet street in Glasgow became an accessory to Vladimir Putin’s attack on Ukraine. It tells how Europe and Russia continue to have a hostile economic relationship while claiming to have severed ties. It tells the hard truth about why the cost-of-living problem ended.

But first and foremost, it is the narrative of a ship – a unique ship.

If you ever see the Yakov Gakkel travelling through the English Channel or the Irish Sea (I initially saw it in the Channel, but at the time of writing, it was heading northwards, around 20 miles off the shore of Anglesey), you might not find it very unusual.

At first glance, it appears to be one of the many enormous, unremarkable tankers and cargo ships that pass by these beaches. Its profile is dominated by a massive blue prow that rises out of the water and ends 50 metres back at an abruptly angular stern.

However, the ship’s slightly unusual shape—all hull and little deck—provides the first indication as to what makes the Yakov Gakkel unique. This is one of the world’s most modern liquefied natural gas (LNG) tankers, with a unique trick up its sleeve.

LNG tankers are highly engineered ships that can store large amounts of natural gas at temperatures of around -163C.

Despite the world’s embrace of renewable energy, natural gas remains one of the most critical energy sources, supplying much of Europe’s heating and power and its industries. There is no low-cost way to make numerous industrial items, from glass and paper to vital chemicals and fertilisers, without gas.

Previously, transferring natural gas from one region to another required sending it down long, expensive, and risky pipelines, limiting access to this vital fuel to countries with a physical connection to gas producers. However, LNG tankers such as the Yakov Gakkel help to solve this difficulty by allowing gas producers to deliver it by sea to any location with a terminal capable of converting their supercooled methane back into the gas we use to heat our homes and power our grids.

But the Yakov Gakkel can do something that most other LNG tankers cannot: its massive blue double hull allows it to carve through ice, allowing it to cruise up to the Arctic Circle and back even in the dead of winter.

And that is precisely what this ship does, more or less constantly: it travels back and forth between Siberia and Europe, through winter and summer, transporting large amounts of gas from Russia to Europe. It helps explain why Europe never ran out of gas, even after Russia invaded Ukraine.

It is important to note that this is not conventional wisdom. When Russia invaded Ukraine, European authorities said that they intended to end the continent’s dependency on Russian gas, which accounted for nearly one-third of its imports by 2022.

Many felt that had already occurred, mainly when the Nord Stream pipeline, Europe’s single largest source of gas imports, was destroyed in late 2022. However, while Russian pipeline gas flows into Europe have declined considerably, Russian LNG shipments into Europe have increased to historic levels.

Russia helps Europe refill its petrol supplies.

Today, Europe still relies on Russia for approximately 15% of its gas, with an increasing amount arriving via sea lanes aboard tankers such as the Yakov Gakkel. While the US has stepped in to compensate for some of the lost volumes when the pipelines were shut down, Russia recently surpassed the US as the continent’s second-largest gas supplier. It provides additional evidence that LNG volumes carried by ships across the North Sea, the Irish Sea, and the English Channel are increasing rather than declining.

This Russian gas has helped Europe replenish its gas reserves and has kept the continent’s heavy industry running during the Ukraine conflict. And this dependence has not come cheaply: Europe has paid Russia over €10 billion for LNG since 2022.

The persistent presence of Russian gas in European systems accounts for at least part of the dramatic drop in European energy prices since the highs of post-invasion. Many market participants predicted the complete cessation of Russian gas supply to Europe at the time, which would have had severe effects. But it never happened.

This may explain why the continent’s governments have so far refrained from outright banning Russian gas imports: they are aware that their economy would struggle to endure another significant surge in inflation, which would occur if they stopped receiving Russian gas entirely.

This week, European leaders agreed to stop allowing Russia to use their ports to “trans-ship” its LNG, effectively serving as a stop-off point for other destinations. However, those transshipments account for only a portion – at most a quarter – of the Russian gas that arrives in Europe via tankers. The vast majority is shipped to Belgium, France, and Spain, where it is used to heat European homes, fuel power plants, and power factory machines.

While European governments have set broad sanctions and price caps on oil supplies, no similar controls exist for liquefied natural gas (LNG). So the Yakov Gakkel and a fleet of LNG tankers continue to sail between Siberia and various European ports, like Zeebrugge, Dunkirk, Montoir, and Bilbao, supplying the continent with Russian hydrocarbons that it still cannot live without.

British company’s involvement in profitable trade

But there’s another reason why this ship is so unique: the Yakov Gakkel, a vital gear in the financial engine that helps sustain the Russian state, is partially owned and operated by a British corporation.

That brings us back to a street in Glasgow that overlooks the Clyde, where the operating offices of a firm named Seapeak are housed in a glass-fronted office complex. You probably have not heard of Seapeak, but the company owns and runs a global fleet of LNG tankers.

That fleet includes the Yakov Gakkel and four other LNG icebreakers that operate in the Siberian trade. It may surprise you that a British company is enabling this lucrative trade for Russia. Still, there is nothing unlawful about it: Russia’s sanctions regime is far more porous than you might have expected.

We attempted to speak with Seapeak several times, asking about the Yakov Gakkel and if they thought it was right, given the UK’s refusal to purchase LNG, that a British company and British staff were assisting with the administration of this Russian transaction. We sent emails including questions. However, they have yet to return our calls or emails.

When I visited their offices in Glasgow after weeks of waiting for a response, I was greeted by a security guard who informed me that Seapeak would only see me with an appointment (which they refused to provide). I was eventually told that if I did not leave, they would call the police.

Seapeak is one of many British companies working to keep Russian gas flowing. While British insurers are prohibited from insuring oil tankers carrying Russian crude, there is no corresponding ban on Russian LNG ships, resulting in many of these tankers being covered by British businesses based in the Square Mile.

We spent some time following another icebreaking tanker, the Vladimir Rusanov, as it approached Zeebrugge. The UK P&I Club covers it, as does several other LNG carriers.

In a statement, it said: “The UK Club takes great care to observe all applicable sanctions regulations about Russian energy cargoes, but the direct carriage of LNG from Yamal to Zeebrugge, and the provision of insurance services for such carriage, is not currently sanctioned.” If the EU and G7 nations change their policies, the Club will adjust or withdraw its services accordingly.

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The transportation of Russian gas into Europe, which relies on British operators and insurers, is just one example of the UK sanctions regime’s flaws and omissions. While government ministers have expressed concerns about the sanctions regime’s overall efficiency, there is little evidence that they intend to tighten this particular aspect of it.

Before the election, the Treasury Select Committee was gathering information for its investigation into the regime, which was likely to focus on insurers of vessels carrying Russian products. However, the investigation was terminated prematurely when the election was called in May.

Meanwhile, ships such as the Yakov Gakkel continue to transport billions of cubic metres of gas from the Yamal gas resources in Siberia to Europe in exchange for billions of euros. These and other hydrocarbon incomes are among the primary reasons Russia can develop more missiles and weapons than Ukraine.

So Europe continues to fuel its industry, power, and heating networks with molecules of gas sourced from Siberian gas fields while telling itself that it is doing everything possible to combat Vladimir Putin.

In short, the situation is uncomfortable. However, given the alternative of inducing another cost-of-living catastrophe, Europe needs more stomach for change.

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