The critical cog in Putin’s machine and how British firms help to keep Russian gas flowing into Europe
This is the story of how an obscure company based in an office block on a quiet street in Glasgow became an accessory in Vladimir Putin’s war on Ukraine. It is the story of how Europe and Russia remain locked in a tense relationship of economic dependence, even as they supposedly cut their ties. It is the story of the uncomfortable truth behind why the cost of living crisis came to an end.
But before all of that, it is the story of a ship – a very unusual ship indeed.
If you ever spot the Yakov Gakkel as it sails through the English Channel or the Irish Sea (I first set eyes on it in the Channel but at the time of writing it was sailing northwards, about 20 miles off the coast of Anglesey) you might not find it all that remarkable.
At first glance it looks like many of the other large, nondescript tankers and cargo vessels passing these shores. Its profile is dominated by an enormous blue prow which reaches high out of the water and ends, 50 metres further back, at its unexpectedly angular stern.
Yet the ship’s slightly odd shape – all hull and barely any deck – is the first clue about what makes the Yakov Gakkel so special. Because this is one of the world’s most advanced liquefied natural gas (LNG) tankers, with an unusual trick up its sleeve.
The Yakov Gakkel tanker
LNG tankers are extraordinary ships, with insides so cleverly engineered they are capable of holding vast amounts of natural gas at temperatures of approximately −163C.
For all that the world is embracing renewable energy, natural gas remains one of the most important energy sources, essential for much of Europe’s heating and power, not to mention its industries. For the time being, there is no cheap way of making many industrial products, from glass and paper to critical chemicals and fertilisers, without gas.
Once upon a time, moving natural gas from one part of the world to another necessitated sending it down long, expensive, vulnerable pipelines, meaning only countries with a physical connection to gas producers could receive this vital fuel. But LNG tankers like the Yakov Gakkel are part of the answer to this problem, since they allow gas producers to send it by sea to anywhere with a terminal capable of turning their supercooled methane back into the gas we use to heat our homes and power our grids.
Politicians in Europe promised to end the continent’s reliance on Russian gas
But the Yakov Gakkel can also do something most other LNG tankers cannot, for that enormous blue double hull allows it to carve through ice, enabling it to travel up into the Arctic Circle and back even in the depths of winter.
And that is precisely what this ship does, more or less constantly: travelling back and forth between Siberia and Europe, through winter and summer, bringing copious volumes of gas from Russia to Europe. It is part of the explanation for how Europe never ran out of gas, even after the Russian invasion of Ukraine.
This is not, it’s worth saying, the conventional wisdom. Back when Russia invaded Ukraine, European policymakers declared they planned to eliminate the continent’s reliance on Russian gas – which accounted for roughly a third of their supplies before 2022.
And many assumed that had already happened – especially after the Nord Stream pipeline, the single biggest source of European gas imports, was sabotaged in late 2022. But while volumes of Russian pipeline gas into Europe have dropped dramatically, the amount of Russian LNG coming into Europe has risen to record levels.
LNG tankers sail between Siberia and various ports in Europe, including Zeebrugge
Russia helps Europe replenish gas stores
Today, Europe still depends on Russia for around 15% of its gas, an ever-growing proportion of which now comes in via the sealanes, on tankers like the Yakov Gakkel. And while the US has stepped in to make up some of the volumes lost when those pipelines stopped, only last month Russia overtook the US to become the second biggest provider of gas to the continent. It’s further evidence that those LNG volumes carried on ships through the North Sea, the Irish Sea and the English Channel, are increasing, rather than falling.
This Russian gas has helped Europe replenish its gas stores, it has helped keep the continent’s heavy industry going throughout the Ukraine war. And this dependence has not come cheap: the total amount Europe has paid Russia for LNG since 2022 comes to around €10bn.
The continued presence of Russian gas running through European grids is at least part of the explanation for why European energy prices have fallen so sharply since those post-invasion highs. Back then, many in the market were pricing in a complete end of Russian gas supply to Europe – something that would have had disastrous consequences. But it never actually happened.
Perhaps this explains why the continent’s politicians have, so far, stopped short of banning imports of Russian gas: they are aware that their economy would struggle to withstand another sharp spike in inflation – which would almost certainly eventuate if it stopped taking Russian gas altogether.
Russian gas has helped keep Europe’s heavy industry going throughout the Ukraine war
This week, European leaders agreed to stop allowing Russia to use its ports to “trans-ship” its LNG – essentially acting as a stop-off point towards other destinations. However, those transshipments account for only a fraction – at most a quarter – of the Russian gas coming in on tankers to Europe. The vast majority ends up in Belgium, France and Spain, heating European homes, fuelling power stations and powering machinery in factories.
While European leaders have imposed wide-ranging sanctions and price caps on shipments of oil, no such controls exist for liquefied natural gas. So the Yakov Gakkel and a fleet of LNG tankers carry on sailing between Siberia and various ports in Europe – Zeebrugge, Dunkirk, Montoir and Bilbao – keeping the continent supplied with the Russian hydrocarbons it still cannot live without.
British firm’s role in lucrative trade
But there is another reason why this ship is particularly unique, for the Yakov Gakkel – this critical cog in the financial machine that helps finance the Russian regime – is actually part-owned and operated by a British company.
That brings us back to a street overlooking the Clyde in Glasgow, where, in a glass-fronted office block, you will find the operational headquarters of a company called Seapeak. The chances are you haven’t heard of Seapeak before, but this business owns and operates a fleet of LNG tankers all across the world.
That fleet includes the Yakov Gakkel and four other LNG icebreakers that ply this Siberian trade. That a British company might be facilitating this lucrative trade for Russia might come as a surprise, but there is nothing illegal about this: the sanctions regime on Russia just turns out to be significantly more porous than you might have thought.
We tried repeatedly to speak to Seapeak – to ask them about the Yakov Gakkel and whether they felt it was appropriate – given the UK has forsworn LNG imports – that a British company and British workers are helping administer this Russian trade. We sent emails with questions. However, they did not respond to our calls or our emails.
When, after weeks of efforts to get a response, I visited their offices in Glasgow, I was met by a security guard who told me Seapeak would not see me without an appointment (which they were refusing to give me). Eventually I was told that if I would not leave they would call the police.
A security guard at Seapeak’s offices in Glasgow said no one was available to speak to Sky News
Seapeak is not the only British company helping keep Russian gas flowing. While British insurers are banned from protecting oil tankers carrying Russian crude, there’s no equivalent sanction on Russian LNG ships, with the upshot that many of these tankers are insured by British companies operating out of the Square Mile.
We spent some time tracking another icebreaking tanker, the Vladimir Rusanov, as it approached Zeebrugge. It is insured by the UK P&I Club, which also insures a number of other LNG carriers.
In a statement, it said: “The UK Club takes great care to observe all applicable sanctions regulations in relation to Russian energy cargoes, but the direct carriage of LNG from Yamal to Zeebrugge, and provision of insurance services for such carriage, is not presently sanctioned. If the EU and G7 nations were to change their policy… the Club would of course comply by adjusting or withdrawing its services, as necessary.”
The Vladimir Rusanov off the coast of Zeebrugge
The transport of Russian gas into Europe – its dependence on British operators and insurers – is only one small example of the loopholes and omissions in the UK sanctions regime. But while government ministers have expressed concern about the effectiveness of the broader sanctions regime, there is still scant evidence they intend to tighten up this corner of it.
Before the election was called the Treasury Select Committee was in the middle of collecting evidence for its own inquiry into the regime, which was expected to focus on insurers of vessels taking Russian goods. However, the inquiry was wound up prematurely when the election was called in May.
Read more on Sky News:
EU sanctions target Russian gas for first time
Russian oil still seeping into the UK
In the meantime, ships like the Yakov Gakkel carry on taking billions of cubic metres of gas from the gas fields of Yamal in Siberia down to Europe, in exchange for billions of euros. And those and other hydrocarbon revenues are one of the main explanations for how Russia is able to produce more missiles and weapons than the Ukrainians.
So Europe carries on fuelling its industry and its power and heating grids with molecules of gas coming from Siberian gasfields, while assuring itself it’s doing everything it can to fight Vladimir Putin.
It is, in short, a discomforting situation. But given the alternative is to induce another cost of living crisis, there is little appetite in Europe to change things.
Donald Trump has described crucial trade talks with Chinese President Xi Jinping as “amazing” – and says he will visit Beijing in April.
The leaders of the world’s two biggest economies met in South Korea as they tried to defuse growing tensions – with both countries imposing aggressive tariffs on exports since the president’s second term began.
Aboard Air Force One, Mr Trump confirmed tariffs on Chinese goods exported to the US will be reduced, which could prove much-needed relief to consumers.
It was also agreed that Beijing will work “hard” to stop fentanyl flowing into the US.
Semiconductor chips were another issue raised during their 100-minute meeting, but the president admitted certain issues weren’t discussed.
“On a scale of one to 10, the meeting with Xi was 12,” he told reporters en route back to the US.
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‘Their handshake was almost a bit awkward’
Xi a ‘tough negotiator’, says Trump
The talks conclude a whirlwind visit across Asia – with Mr Trump saying he was “too busy” to see Kim Jong Un.
However, the president said he would be willing to fly back to see the North Korean leader, with a view to discussing denuclearisation.
Mr Trump had predicted negotiations with his Chinese counterpart would last for three or four hours – but their meeting ended in less than two.
The pair shook hands before the summit, with the US president quipping: “He’s a tough negotiator – and that’s not good!”
It marks the first face-to-face meeting between both men since 2019 – back in Mr Trump’s first term.
Donald Trump and Xi Jinping. Pic: AP
There were signs that Beijing had extended an olive branch to Washington ahead of the talks, with confirmation China will start buying US soybeans again.
American farmers have been feeling the pinch since China stopped making purchases earlier this year – not least because the country was their biggest overseas market.
Chinese stocks reached a 10-year high early on Thursday as investors digested their meeting, with the yuan rallying to a one-year high against the US dollar.
Analysis: A fascinating power play
Sky News Asia correspondent Helen-Ann Smith – who is in Busan where the talks took place – said it was fascinating to see the power play between both world leaders.
She said: “Trump moved quickly to dominate the space – leaning in, doing all the talking, even responding very briefly to a few thrown questions.
“That didn’t draw so much as an eyebrow raise from his counterpart, who was totally inscrutable. Xi does not like or respond well to unscripted moments, Trump lives for them.”
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On Truth Social, Mr Trump had described the summit as a gathering of the “G2” – a nod to America and China’s status as the world’s two biggest economies.
While en route to see President Xi, he also revealed that the US “Department of War” has now been ordered to start testing nuclear weapons for the first time since 1992.
Some of the world’s biggest tech giants reported quarterly earnings on Wednesday – with a mixed bag of results as fears grow that a bubble is forming in artificial intelligence.
Microsoft revealed that its spending on AI infrastructure hit almost $35bn (£26.5bn) in the three months to the end of September, a sharp rise compared with the year before.
Despite revenue jumping 18% and net income rising 12%, shares plunged by close to 4% in after-hours trading, with investors concerned about the mounting costs of sustaining the boom.
Microsoft is now a $4trn company thanks to its stake in ChatGPT maker OpenAI. AP file pic
Microsoft’s vice president of investor relations Jonathan Neilson said: “We continue to see demand which exceeds the capacity we have available.
“Our capital expenditure strategy remains unchanged in that we build against the demand signal we’re seeing.”
Big Tech is facing increasing pressure to show returns on the massive AI investments they’re making, against a backdrop of soaring valuations and limited evidence of productivity gains.
Microsoft became the world’s second most valuable company this week thanks to its 27% stake in OpenAI, the creator of ChatGPT.
Its market capitalisation surged beyond $4trn (£3trn) at one point, but that psychologically significant threshold is now in doubt because of recent selloffs.
iStock file pic
Alphabet makes history
Last night’s results weren’t all doom and gloom – with shares in Google’s parent company surging by 6% in after-hours trading.
Alphabet has also set out aggressive spending ambitions, but placated investors thanks to an impressive set of results that surpassed analysts’ expectations.
Total revenue for the quarter stood at a staggering $102.35bn (£77bn), with the search giant’s advertising unit remaining robust despite growing competition.
But concerns linger that Alphabet’s dominance in search could be undermined by AI startups, with OpenAI recently unveiling a browser designed to rival Google Chrome.
Hargreaves Lansdown’s senior equity analyst Matt Britzman shrugged off this threat – and believes the company is “gearing up for long-term AI leadership”.
He said: “Alphabet just delivered its first-ever $100bn quarter, silencing the doubters with standout performances in both Search and Cloud.
“AI Overviews and AI Mode are clearly resonating with users, helping to ease fears that Google’s core search business is under threat from generative AI.
“With ChatGPT’s recent browser demo falling short of a game-changer, Google looks well-placed to put up a strong defence as gatekeeper to the internet.”
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Federal Reserve cuts interest rates
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Browser could ‘change the way we use the internet’
Meta faces a mauling
Meta – the parent company of Facebook, Instagram, and WhatsApp – saw its shares tumble by as much as 10% in after-hours trading.
Mark Zuckerberg’s tech empire anticipates “notably larger” capital expenses next year as it ramps up investments in AI and goes on a hiring spree for top talent.
Net income in the third quarter stood at $2.7bn (£2bn) and suffered an eye-watering $16bn (£12bn) hit because of Donald Trump’s “Big Beautiful Bill”.
Meta was late to the party on AI but has now doubled down on this still-nascent technology – setting an ambition to achieve superintelligence, a milestone where machines could theoretically outthink humans.
The social networking giant continues to benefit from its massive user base, and expects fourth-quarter revenues of up to $59bn (£44bn).
Business
Victims of Post Office Capture scandal say they are being treated as ‘second-class’ citizens
Victims of the Post Office Capture scandal say they are being treated as second-class citizens – accusing the government of running a “two-tier” compensation system.
It comes as the Department for Business and Trade announced the launch of the first-ever redress scheme for those wronged after faulty software created false accounting shortfalls in the 1990s.
Capture was used between 1992 and 1999 in up to 2,500 Post Office branches, with many sub postmasters making up cash losses themselves.
A government-commissioned report last year found it was likely the software caused accounting errors.
The Capture Redress Scheme will provide payments of up to £300,000, and more in “exceptional” cases, to former postmasters who suffered financial losses.
Steve Marston, who was convicted in 1998 of stealing from his branch and is not yet eligible to apply to the scheme, said other victims were feeling “frustrated” with it.
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‘Unbearable’ wait to clear names for Post Office victims
“I want to know, what do they consider exceptional circumstances?” he said, “because I want it to see it in black and white what they consider as exceptional circumstances rather than just a vague statement.”
He said that victims felt like “second-class” citizens, describing the Horizon schemes and the new Capture scheme as “two-tier” systems.
“[It’s] one law for the Horizon victims, and a totally different law for us Capture victims and that’s not really fair.
“One of the main bones of contention is the fact that with Horizon there’s a right of appeal against decisions, and you’ve got multiple rights to appeal.
“Whereas with the Capture appeal process, there’s only a one-shot chance, so basically, it’s a second-class system.”
The scheme will be tested for the first 150 claimants before a full roll-out.
Chris Roberts, whose mother Liz was jailed in 1999 for theft, is one of them and said victims were concerned about the “glacial pace” of government.
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November 2024: More post office convictions investigated
He is able to apply to the redress scheme on behalf of his father, who was a postmaster alongside his mother, who oversaw accounts.
Both Liz and Bill Roberts have passed away.
“I’d hate us to get to the point where, you know, this scheme’s come out and we go through these 150 cases and then it’s further developed … and half the people it would apply to are gone,” Chris said.
“We will lose people before they can see justice, and I think that’s a terrible tragedy.”
Under the Capture scheme, eligible claimants will receive an immediate interim payment of £10,000.
An independent panel will then assess final awards through a banding model ranging from £10,000 to £300,000, with higher payments in exceptional circumstances.
The Post Office Minister Blair McDougall, speaking exclusively to Sky News, said he understood why victims have “low levels of trust in the state”.
He said: “They’ve been treated appallingly by the state, but what we’ve done with this scheme is to try to learn some of those lessons from previous compensation schemes for postmasters that didn’t work.
“So we’re collecting more evidence from the beginning to try to speed things up.
“We’re trying to give sub postmasters the benefit of the doubt throughout this. And I hope we will see that this scheme treats them with a bit more dignity and a bit more urgency.”
He also said that funds overall for the Capture scandal were “uncapped”, with “no ceiling” on compensation.
Mr McDougall also said that the government was working “as fast as we possibly can, and that’s because people have waited so long”.
Read more:
At least eight Capture convictions investigated
Major milestone in Post Office scandal
When asked if he would personally guarantee speedy redress, he replied: “Absolutely – that’s what we are doing today, to make sure that we have a scheme that gets people’s redress as quickly as possible.
“But it’s challenging, because we’re dealing with cases where there’s not a lot of evidence. So much time has passed.
“So we tried to design a scheme to get postmasters the benefit of the doubt and to try to be as fair as possible.”
He said within the scheme there was the “opportunity” for victims to make a “wider case of the impact on their lives – and if the independent panel feels that there is a compelling case, they can go beyond that £300,000”.
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