The cost of sanctions

[Bulletguy]

 

As some may have noticed certain Russian oligarchs have had their superyachts seized as part of the sanctions against Russia.

 

Ok, great.......or is it? This guy who works in the superyacht industry explains what happens, the legal requirements, and whose left footing the bill.

 

The figures are eye watering and it's not nearly as simple as everyone wants to believe.

 

[Geeco]

Paul, eSysman is an interesting site that I regularly follow. In his latest vid he indicated that all the outstanding debts associated with the vessel seized by the US Govt will be to the buyers account. Suggestion is that the buyer is the Turkish boat builder that built it. After the 10 year inspection is completed it will be sold to the previous Russian owner.

Cheers,

[John52]

Geeco - 2022-09-01 6:24 AM

Suggestion is that the buyer is the Turkish boat builder that built it.

 

Who being the only bidder will be able to name their own price?

 

Often the least worst option is to do nothing.

Problem is populist politicians want to be seen to be doing something popular.

So we get things like Sunak's ('ingenious' according to the Daily Mail *-) ) eat out to spread it around scam which makes the situation worse :-S

[Bulletguy]

Geeco - 2022-09-01 6:24 AM

 

Paul, eSysman is an interesting site that I regularly follow. In his latest vid he indicated that all the outstanding debts associated with the vessel seized by the US Govt will be to the buyers account. Suggestion is that the buyer is the Turkish boat builder that built it. After the 10 year inspection is completed it will be sold to the previous Russian owner.

Cheers,

Hi Gary.....yes Sysmans channel is excellent and i've subscribed to it for some time now as his content and presentation is always fascinating.

 

I'm not sure which boat you are referring to as the video I posted details the costs of keeping any seized yacht/s maintained and crewed which has to be paid by the country which seizes it, in this case Italy who seem to have seized most so far. The figures are truly eye watering!

 

The only one which has been auctioned off so far has been "Axioma" and nobody will know who the buyer is as the bids were sealed and will take approx a fortnight to sort out.

[Geeco]

Yes Paul I was relating to the vessel Axioma.. The whole exercise seems farcical - The vessel owner is placed on the sanctions list, the vessel is seized, then sold to the vessel builder, has a 10 year inspection then sold to the guy on the sanctions list. Probably then sailed from the repair slip in Turkey to a port in the Black Sea. You could write a book or make a Netflix series about the whole episode.

While I am not a socialist I struggle with the decadence of these vessels especially when a number are owned by people from a socialist country. Fascinating. Cheers

[John52]

Geeco - 2022-09-05 9:19 AM

I struggle with the decadence of these vessels especially when a number are owned by people from a socialist country.

You mean they call themselves socialists *-)

As Brian Kirby says - you can call a dog Rudolf but it doesn't make it a reindeer

[John52]

On the subject of sanctions I am dismayed by so many people who think the solution to the gas shortage is to peg the price with subsidies. So people keep using the same amount, prices go up, and the subsidies increase. Again and again. Going round in circiles which only serves to enrich Murderous Bin Salman - we can't slap a windfall tax on him.

If we are serious about helping Ukraine we have to do more than virtue signalling flag waving like Downing Street.

We need to cut our gas consumption

Which means inconveniencing ourselves.

So my gas is turned off and any visitors will have to keep their hats and coats on, same as me.

[Bulletguy]

Geeco - 2022-09-05 9:19 AM

 

Yes Paul I was relating to the vessel Axioma.. The whole exercise seems farcical - The vessel owner is placed on the sanctions list, the vessel is seized, then sold to the vessel builder, has a 10 year inspection then sold to the guy on the sanctions list. Probably then sailed from the repair slip in Turkey to a port in the Black Sea. You could write a book or make a Netflix series about the whole episode.

While I am not a socialist I struggle with the decadence of these vessels especially when a number are owned by people from a socialist country. Fascinating. Cheers

But nobody knows who Axioma has been sold to, the bids were sealed, and the only way a sanctioned owner could buy it back would be through a shell company.....and good luck with that as the authorities would be watching. Hence the reason all 63 bids on Axioma are being scrutinized by the Admiralty Marshal in Gibraltar before releasing the vessel to the new owner.

 

But the point I was making in the opening post was as Sysman explains, once one of these megayachts is seized it becomes the sole responsibility of the country where it was seized to ensure maintenance and also essential crew kept onboard. In the case of Axioma that responsibility has fallen to Gibraltar. Other yachts seized are in Italy so their government will be footing a hefty bill. I expect, or at least hope (!!), whatever the sum total is get's taken from any sale. But that shows seizing an Oligarchs megayacht isn't simply a case of taking it off them and leaving it tied up in a harbour!

 

Axioma has primarily been used for charter work so i'd expect that to continue and hopefully all crew still have their jobs. Both Captains are Brits and a fair few of the crew. This link details each (click on crew);

 

https://www.my-axioma.com/index.php/en/about-axioma/welcome-captain/

[Bulletguy]

John52 - 2022-09-05 12:17 PM

 

We need to cut our gas consumption

Be realistic John. People have to eat and heating isn't a luxury. It doesn't take much for damp to set into a property in our climate which brings with it all kinds of problems, including health.

[colin]

Bulletguy - 2022-09-05 5:34 PM

 

John52 - 2022-09-05 12:17 PM

 

We need to cut our gas consumption

Be realistic John. People have to eat and heating isn't a luxury. It doesn't take much for damp to set into a property in our climate which brings with it all kinds of problems, including health.

 

See that avatar John52 uses, that's my mate, wouldn't hurt him to wear more.

[John52]

Bulletguy - 2022-09-05 5:34 PM

 

John52 - 2022-09-05 12:17 PM

 

We need to cut our gas consumption

Be realistic John. People have to eat and heating isn't a luxury. It doesn't take much for damp to set into a property in our climate which brings with it all kinds of problems, including health.

 

Yes, but using less gas is not optional.

How else can we reduce our gas consumption?

[Bulletguy]

John52 - 2022-09-05 6:05 PM

 

Bulletguy - 2022-09-05 5:34 PM

 

John52 - 2022-09-05 12:17 PM

 

We need to cut our gas consumption

Be realistic John. People have to eat and heating isn't a luxury. It doesn't take much for damp to set into a property in our climate which brings with it all kinds of problems, including health.

 

Yes, but using less gas is not optional.

How else can we reduce our gas consumption?

People cannot reduce John, they need to live normally as human beings!

 

Truss has got to put an immediate freeze on energy now otherwise we will have many deaths of elderly over winter not to mention the number of small businesses it will finish off. It should never have been allowed to escalate but it suits this government.

[John52]

Bulletguy - 2022-09-05 8:04 PM

People cannot reduce John,

 

Some of them will have to because Putin has turned nordstream off.

Unless you can find gas to replace it from somewhere else?

[John52]

Bulletguy - 2022-09-05 8:04 PM

Truss has got to put an immediate freeze on energy now .

 

How can she do that?

[John52]

John52 - 2022-09-05 9:38 PM

 

Bulletguy - 2022-09-05 8:04 PM

Truss has got to put an immediate freeze on energy now .

 

How can she do that?

 

Looks like another screeching U turn on her first day?

An unfunded (borrowed money) committment to peg prices for everyone - bidding up the market price to the benefit of countries like Norway who were sensible enough to keep their energy supplies in public ownership. And Murderous Bin Salman who is making the most out of us.

Naturally the wealthiest will benefit the most since they use the most power.

And, on past experience, will be another bonanza for fraudsters and the companies who hire Tory MPs :-S

[John52]

Interesting article in the FT giving an idea of how fiendishly complicated it is to try and cap the price in the UK now everything has been sold to a hugely complex array of private operators that nobody really understands. Doesn't help to look at other countries because no other country in the world faces these problems because no other country in the world has done what the UK has done with its power and water supplies. Our neighbouring countries have kept their energy companies in public ownership leaving them rolling in our money as we are dependent on them for our power. We also have the extra complication of vested interests hiring Members of Parliament to serve them and not us.;

 

QUOTE: The discussion about soaring UK energy costs has shifted away from whether households will need help to cope this winter (answer: they will) to debating a slightly bewildering range of ideas for market intervention: essentially capping prices.

 

The question is which price you cap, and at which point in the system. Most attention to date has been on the price of domestic supply, currently regulated by the default tariff cap that has proved totally unable to handle the stratospheric wholesale gas prices unleashed by Russia’s invasion of Ukraine.

 

This is what Scottish Power’s £100bn proposal targets, as well as the Labour party’s policy: fixing what households pay for their gas and electricity. It is well chewed over as huge, blunt and expensive. It would require separate action to help businesses. But some variant of this may lie behind reports that new prime minister Liz Truss is considering freezing energy bills.

 

In the past two weeks, however, there have been more calls to intervene in the generation or wholesale markets directly, to break the link between expensive imported gas and consumer bills. Doing this properly, an overdue market reform that the government has started consulting on, will take years. Hence the hunt for interim solutions.

 

An entry-level version of this is the one being looked at by the government. This involves a scheme to swap generating companies from old-style renewables obligations contracts, which in effect pay wholesale gas prices for renewable power, to new 10-15-year fixed-price deals.

 

This could take about a quarter of the UK’s generating capacity and unlink it from soaring gas prices. It relies on existing systems so is achievable and could be voluntary: the sector likes the certainty that would come with longer contracts.

 

That is also the downside: securing agreement is likely to mean spreading today’s high prices over the 15-year duration of new contracts, simply moving gains around. The new prime minister has ruled out a windfall tax on generators, the obvious stick in the government locker to help negotiate a good deal.

 

From here, the ideas start to run into more serious problems, legally, technically and politically. Take the broader idea of capping the price of renewable and nuclear power, at a level that rewards investment but is well below market prices. Problem one: this is a windfall tax by another name.

 

Another issue is that most of that output is sold on long-term contracts, and hedged, the details of which the government doesn’t have.

 

Either a cap is limited to lucrative spot sales, reducing its impact. Or it involves forcibly breaking the terms of those long-term contracts.

 

“Because of the contractual arrangements it would be fiendishly complicated, and difficult to implement ahead of the start of winter,” said Tom Edwards from energy consultancy Cornwall Insight. The same is true for a “shock absorber” proposal to set price caps by generating method, or even depending on where it is generated, to limit prices relative to the costs of generation.

 

There are similar questions about a cap on the price of domestically produced gas. That would be a windfall tax on steroids.

 

Even if it flew politically, it would involve untangling long-term contracts between generators and suppliers, the details of which are unknown. “The sector was designed as an open market and a lot of the information you’d need is buried in private contracts,” said Adam Bell from consultancy Stonehaven. Another unknown is how much gas could leak into overseas markets, where prices are higher.

 

The advantage of a price cap on domestically produced gas is that it would flow through the system, to electricity pricing, gas central heating, business contracts and industrial users. That is also a risk: in a winter of serious gas scarcity, it could encourage more demand than would otherwise have been the case. “A price cap makes rationing much more likely,” said Bell — something that, again, Liz Truss has ruled out.

 

Ideological or legal niceties might not matter to a government that really got itself on to a war footing. As yet, there is little sign of that. Even if a generation or gas market cap could be cut to fit, it seems unlikely to suit the UK’s new prime minister.

 

Top comment;

 

This is a national emergency.

Unfortunately you need to ration demand. There is no other way when supply is so limited.

If energy generators need help with their margin calls, prepack the operating asset from an administration process. That will deal with the contracts.

All other options just transfer cash to the generators and suppliers, which will decimate the economy. It really is that serious, but people are again ignoring the seriousness as we did in early March 2020 for Covid.

 

[Bulletguy]

Gary,

Axioma sold for $37.5 million. The buyer will not be disclosed.