36 Wednesday February 23 2022 | the times
Business
national security of Britain.”
Anglo-Russian trading links run
deep. Last year, UK imports from
Russia hit £11.6 billion, including key
commodities such as oil and metals.
Brennan, of Verisk Maplecroft, said:
“Gold, platinum, and petroleum are all
potential targets for UK trade sanc-
tions. Gold and platinum exports would
have the greatest impact, as Britain is
Russia’s largest market for these.”
However, the pain would be felt both
ways. “There is no cost-free responsehere,” he said. Britain sourced a third of
its diesel imports and 11 per cent of its oil
imports from Russia in 2020. “Sanc-
tions on these ... would likely exacer-
bate high energy prices.”
While Britain imports only small
volumes of LNG direct from Russia via
tankers, its gas markets are closely con-
nected with Europe’s, which depend on
Russian pipelines. European leaders
are reluctant to impose sanctions on
Russian energy firms for this reason.
Many more British businesses willQ&A
How important is Russian
gas for Europe?
Very. Russia typically
supplies about a third of
Europe’s gas, primarily
through a series of
pipelines including Yamal,
which runs through Belarus
and Poland to Germany;
Nord Stream, which goes
directly to Germany; and
pipelines through Ukraine.How much gas does Britain
get from Russia?
Britain has no direct
pipeline links with Russia
but does receive shipments
of Russian liquefied natural
gas. In 2020, Russia
accounted for 12 per cent of
Britain’s LNG imports, or
5 per cent of total imports.Why would restricted
supplies to Europe affect
UK gas prices?
British and European gas
markets are connected by
pipelines, so any disruption
in Europe has a knock-on
effect in Britain. If European
countries faced a shortage
of gas from Russia, they
would seek to replace that
from other sources that
Britain also relies on,
increasing demand and
pushing up prices.What would this mean for
energy bills?
Energy bills are already
soaring, with tariffs to jump
by 54 per cent from April 1
for 22 million households
covered by the price cap,
because of high gas prices
in the second half of last
year. If prices remain high
or rise even further, that is
likely to mean energy bills
rise even further when thecap is updated in October.How much oil does Europe
get from Russia?
Russia was the EU’s biggest
source of oil imports,
accounting for 27 per cent
in 2019. Russia was also
Britain’s third biggest
source of oil imports in
2020, accounting for about
11 per cent, behind Norway
and the US. As well as crude
oil, Russia supplies refined
products such as diesel.
Russia was Britain’s biggest
source of road diesel
imports, a third of imports
or 18 per cent of total
supplies, in 2020.How could the crisis affect
oil and petrol prices?
Petrol prices have already
hit all-time highs of £1.49 a
litre in Britain and are
expected to rise further,
with oil prices typically
taking a few weeks to feedthrough to prices at the
pump. Simon Williams, of
the RAC, said the Ukraine
crisis would “undoubtedly
send fuel prices inexorably
higher towards the grim
milestone of £1.50 a litre”.Is Russia profiting from
higher prices?
Yes. Higher oil and gas
prices, driven in part by the
tensions over Ukraine,
should feed through to
higher revenues for the
Russian government. Based
on present levels of Russian
crude oil and refined
product exports, Ron Smith,
an analyst at BCS Global
Markets in Russia, estimates
that every $10 increase in
the price of oil delivers
about an extra $60 million
per day in tax revenues to
the Russian government
and about $6 million extra
income per day for oil
companies in Russia.1
Oil prices came within a
whisker of hitting $100 a barrel
and gas prices surged as the
Ukraine crisis escalated. Brent
crude, the global benchmark ,
touched $99.50 a barrel, the
highest since September 2014,
after Moscow ordered troops into
two breakaway regions in eastern
Ukraine. Page 352
One of the Bank of England’s
most hawkish rate-setters has
played down the prospect of
rapid interest rate rises, saying
that they will be nowhere near the
levels seen before the financial
crisis in 2008. Sir Dave Ramsden,
one of the four members of the
monetary policy committee to
vote for rates to increase by 0.5
points in February, said rate rises
will be modest. Page 353
Pharmaceutical giant
GlaxoSmithKline has unveiled
“Haleon” as the new name for
its consumer healthcare division,
which is set to be spun off and
listed in London as a top-20
member of the FTSE 100 in the
middle of this year. Page 354
Sanctions on Russia scarcely
scratch the surface of its
business links with the UK.
From the dozens of Russian
companies listed in London, to
BP’s 20 per cent stake in Rosneft
and the flow of commodities to
the UK, Anglo-Russian commerce
is now under intense scrutiny.5
Porsche’s owners, Volkswagen
and the Piëch and Porsche
families, have confirmed a
preliminary agreement to look at
an initial public offering. There
was speculation the marque could
be worth as much as €200 billion.6
Tax returns boosted public
sector finances last month but
inflation pushed up the cost of
interest payments on government
debt to almost four times its level
last year. A surplus of £2.9 billion
in January was thanks to an uplift
in self-assessment receipts. Page 387
HSBC has lifted its bonus pool
to $3.5 billion after its annual
profits jumped and the bank
became locked in a war for talent
with rivals. The FTSE 100 lender
said yesterday that the pool for
last year rose by 31 per cent
compared with 2020, and was at
its highest since 2014. Page 408
THG has attempted to
reassure investors after
reports that Unilever was
restricting access to its beauty
brands. Shares in the ecommerce
group fell 6 per cent after reports
that Dermalogica, a Unilever
skincare brand, reduced supplies
amid concerns that THG was
discounting aggressively. Page 419
The chief executive of the
knee replacement group
Smith & Nephew is to leave
abruptly, a little over two years
after he took the top job. Roland
Diggelmann will be replaced by
Deepak Nath from the health
business of Siemens. Page 4210
John Wood Group is
delaying its results after
taking a fresh $100 million
charge on a defence project. The
charge relates to work on Aegis
Poland, inherited as part of its
£2.2 billion takeover of rival Amec
Foster Wheeler. Page 43Need to know
Unpicking Russia’s web of
Russian companies listed on the London Stock Exchange
Market capitalisation, February 21, 2022
Gazprom*
Sberbank
Rosneft*
Novatek*
Lukoil*
Norilsk Nickel*
Gazprom Neft*
Polyus*
Severstal*
Novolipetsk Steel*
Surgutneftegas*
Tatneft*
PhosAgro*
Magnitogorsk*
Polymetal International
Acron*
Mobile TeleSystems*
Magnit*
VTB Bank*
En+ Group International*
Fix Price Group
RusHydro*
Rostelecom*
Rosseti*
Sistema*
Federal Grid Company*
Novorossiysk Sae Port*
Globaltrans
Lenta International*
HMS Group
Zaim Credit Systems£61,346.8m
£43,688.2m
£41,187.8m
£37,981m
£36,374.5m
£28,768.5m
£19,942.6m
£16,174.6m
£11,967.4m
£11,812m
£10,115.5m
£8,922.9m
£6,680m
£5,837.6m
£5,070.2m
£4,971.6m
£4,380.1m
£4,155.8m
£3,928.3m
£3,802.2m
£3,301.2m
£2,782.3m
£1,997.7m
£1,663.6m
£1,479.5m
£1,355.7m
£964.6m
£769.4m
£749.5m
£71.5m
£18.5m
*Public Joint Stock Company. Source: S&P Global Market Intelligence; DealogicRussian company
flotations
in London
2010 3
2011 6
2012 3
2013 1(^20141)
20150
20160
2017 1
20180
(^20190)
20200
2021 1
Boris Johnson yesterday unveiled “the
first barrage” of sanctions against Rus-
sian business interests in response to
the country’s movement of troops into
Ukraine. Yet the measures scarcely
scratch the surface of the extensive
business links between Moscow and
Britain. From the dozens of Russian
companies listed in London, to BP’s
20 per cent stake in Kremlin-backed
Rosneft and the flow of commodities to
the UK, Anglo-Russian commerce is
under intense scrutiny as the prime
minister and his counterparts in the EU
and America mull further sanctions.
“The latest tranche of UK sanctions
is tepid, given they are limited to target-
ing five small Russian banks and three
individuals,” Hugo Brennan, principal
geopolitics analyst at risk intelligence
company Verisk Maplecroft, said.
“None of the big state-owned
Russian firms with listings in London
have been targeted [because] the UK
needs to keep a deal of powder dry, or
risk losing any remaining leverage to
prevent more widespread Russian mili-
tary incursions into Ukraine.”
Two dozen companies incorporated
in Russia are listed on the London
Stock Exchange, spanning sectors from
energy to mining, retail and banking.
They include three of Russia’s
biggest state-backed compa-
nies helping to fund the re-
gime: Gazprom, the gas
giant; Rosneft, the oil com-
pany; and SberBank.
Other Russian groups on
the LSE include Lenta Inter-
national, the supermar-
ket chain; Polyus, the
gold giant; and En+
Group, the energy
and metals group
controlled by Oleg
Deripaska until he
reduced his stake
after being hit by
sanctions in 2018.
There are also Rus-
sian businesses incor-
porated elsewhere: dis-
count retailer Fix Price, which listed
with a $8.3 billion valuation last year;
the biggest Russian listing in London
since western sanctions started being
imposed on the country in 2014 is offi-
cially incorporated in the British Virgin
Islands. In all, S&P Global Market In-
telligence counts 31 companies with
headquarters in Russia listed on the
LSE with a combined market capitali-
sation of £382 billion as of Monday.
Even that figure excludes firms focused
on Russia such as Evraz, Roman
Abramovich’s steel group, which is
headquartered in Britain.
The business links go both ways: the
biggest foreign investor in Russia is
London-based oil and gas giant BP,
which owns 19.75 per cent of Rosneft,
making it the second-biggest share-
holder after the Russian state. Last year,
Rosneft accounted for about $2.7 bil-
lion, or 12 per cent, of BP’s underlying
profits before interest and tax, and a
third of its production. Bernard Loon-
ey, BP’s boss, sits on Rosneft’s board
alongside chief executive Igor Sechin, a
close Putin ally, and Alexander Novak,
Russia’s deputy prime minister. Both
were subject to US sanctions in 2014
over Russia’s annexation of Crimea.
BP’s larger rival, Shell, is also closely
involved in the Russian energy sector,
one of five western energy firms that
have together funded half the con-
struction of the Nord Stream 2 pipeline
from Russia to Germany, in partnership
with Russia’s Gazprom. In 2017 Shell
committed up to €950 million to the
project, with chief executive Ben van
Beurden saying the following year that
“for all the genuine, deeply-felt political
concerns around Nord Stream 2, the
reality is that Europe needs it”.
Germany yesterday halted its final
approval for the pipeline.
Bill Browder, chief executive of
Hermitage Capital and head of the
Global Magnitsky Justice campaign,
said that the deep business links
between Russia and Britain have
weakened the UK’s response to
Putin, left.
He told The Times: “All the
Russian money sloshing
around London, plus BP
and others investing in
Russia, has tamped down
any potential reaction to
outrageous behaviour for
the last 20 years. We
shouldn’t let the share-
holders of BP hijack the
Decades of trade links
mean sanctions will
hurt Britain too, write
Emily Gosden and
Louisa Clarence-Smith
continued from page 35
Prices soar over Ukraine conflict
set of sanctions must eventually
include not buying Russian oil and
gas for Continental Europe” but that
action would be “costly, particularly
for living standards”.
“Any international action will likely
not only to add to the current
inflationary binge, possibly bringing
inflation close to 10 per cent, but also
should slow down growth,” he said.
The FTSE 100 reversed its early
losses, helped by rising oil prices. It
ended the day up 9.88 points, or
0.1 per cent, at 7,494.21. In Europe,
Gemany’s Dax closed down 38.12 or
0.3 per cent at 14,693.00 and the
CAC40 in Paris fell by just 0.74 or 0.01
per cent at 6787.60.
On Wall Street, however, indices
were sharply lower. The broadly-
based S&P 500 shed 1 per cent to
4,304.76, it lowest close since October
and putting it into correction territory
with a fall of more than 10 per cent
from its recent peak. The technology
heavy Nasdaq lost 1.2 per cent to
13,381.52.