Could sanctions leave oligarchs’ super yachts high and dry in Spain?

Among the many gleaming white boats lining Barcelona's historic port, the super yachts of the super-rich stand out.

If there are fewer of them than usual at the moment it's because most are still wintering in the Caribbean. However, overshadowing the small fry (super yachts are roughly defined as starting from 25 metres in length) are a number of palatial vessels, including yachts owned by the King of Bahrain, Walmart heiress Nancy Walton Laurie, and media mogul Barry Diller.

Among them are three vessels belonging to some of Russia's wealthiest men. They have a combined value of hundreds of millions of dollars. Their owners could be forgiven for feeling a little nervous as western governments ponder who to target next in a threatened barrage of sanctions against Russia in retaliation for its invasion of Ukraine.

All three yachts are in for refitting in the MB92 shipyard, which specialises in servicing super yachts. The largest is the 139-metre, Bermudan-flagged Solaris, which belongs to Roman Abramovich, the man who owns 29% of mining company Evraz, as well as Chelsea football club.

Finally, there is the 70-metre Galactica Super Nova, whose owner is Vagit Alekperov, president and chief executive of Lukoil, in which he has around a 20% stake. He also owns 36.8% of the football club Spartak Moscow.

Lukoil is considered to be a potential target for European sanctions, given the energy giant's importance to the Russian economy, and the fact that it is already subject to some US sanctions. It is a company of strategic importance to Russia, and Alekperov was among a gathering of business leaders summoned by Putin to a meeting in the Kremlin on Thursday.

Since 2017, Alekperov has also been part-owner of Marina Port Vell, Barcelona's pleasure port. The old port, which dates back to Roman times, was renovated for the 1992 Olympic Games, and in 2010 it was ceded by the conservative city government to the London-based Salamanca Group for development as a marina for super yachts.

Abramovich is one of 35 individuals who should be considered for sanctions, according to a list drawn up by the organisation of Russian opposition leader Alexei Navalny.

The names of the 35, who range from businessmen to media owners, government officials and politicians, was read out in parliament this week last week by Liberal Democrat foreign affairs spokesperson Layla Moran. She said: "We need to start by heeding the names of those who were identified by Alexei Navalny and his team as 'key enablers' more than a year ago."

Abramovich holds Israeli and Portuguese citizenship and his lawyers insist that "he is not subject to sanctions, and this has been confirmed publicly by the prime minister". They have said neither he nor Evraz "fit the description of those likely to be subject to sanctions, as set out by the foreign secretary". Alekperov and Molchanov did not respond to requests for comment.

The three businessmen have not been named on any sanctions list. However, both US president Joe Biden and Boris Johnson have threatened wider action against the owners of companies across sectors including energy, mining and construction, which puts individuals such as Alekperov within the scope of those who could be affected.

"The UK's new designation criteria permit a broad range of businesses to be designated as financial sanctions targets," says sanctions expert Stacy Keen at law firm Pinsent Masons. "In relation to Russia's strategically important businesses, the regulations specify that this applies to those operating in the chemicals, construction, defence, electronics, energy, extractives, financial services, transport and information, communications and digital technologies sectors."

So, were such sanctions applied, what would it mean for the oligarchs' yachts in Barcelona and elsewhere?

"The way sanctions work is that they don't seize assets, but freeze them, and the individuals can't use them to generate funds," says Keen.

"If the EU were to make a designation equivalent to that made by the UK, no Spanish or other EU business would be allowed to supply services, from fuel to crew, for the use of the yacht. In effect, the yacht wouldn't be able to function."

How this will play out depends on the alignment of sanctions between the main players - the US, the UK and the EU. All three have promised coordinated action, and while there are some differences in measures taken in recent days, there are areas of overlap.

However, this is unlikely to have any knock-on effect on the thriving wider super yacht market, where order books are full for at least five years. According to MB92, 185 super yachts were built in 2021, compared with 148 in 2019. Covid led to a boom in the deluxe vessels, which provide an ideal form of social distancing for the 1%. Record numbers of the vessels were moored off the coasts of Italy and Greece in 2021.

The long waiting lists have also boosted the secondhand super yacht market as well, with some vessels selling for more than their original cost.

The business is getting bigger and so are the boats, as billionaires vie to outdo each other with their floating palaces. Solaris, which cost $600m, was built last year, and can reportedly accommodate 36 guests in its 18 luxurious cabins as well as 60 crew members. There is a gym, swimming pool, sauna, beauty salon and a jacuzzi. It is said to come with state-of-the-art security including a radar-controlled missile detection system, bulletproof windows and armoured protection. The yacht was spotted sailing up the Catalan coast on Wednesday, possibly on sea trials after its refit in Barcelona, before returning to its moorings.

These yachts are not only hugely expensive to build, they cost a fortune to maintain and crew. On average, owners must spend 10% of the purchase price annually to keep one afloat, which means Solaris has running costs of around $60m a year.

Solaris is just one of Abramovich's four yachts. The 170-metre Eclipse, currently moored in the Caribbean, is the second largest in the world, after the 180-metre Azzam owned by Khalifa bin Zayed Al Nahyan, president of the UAE. The Eclipse was in the Barcelona shipyard for a refit at the end of last year.

Despite their vast size, some super yachts travel with a "shadow boat" that carries accessories - such as speedboats, jet skis, cars, helicopters and even submarines - which the owners don't want cluttering up their showcase yacht.Refits take a minimum of three months, sometimes much longer, during which time the yard may need to accommodate hundreds of crew members.

Part of the popularity of Barcelona as a marina and a super yacht shipyard is that crew get to spend months in one of the world's most attractive cities while the vessels are moored or in dry dock. If sanctions are imposed, the oligarchs' crews may find they have a lot more time on their hands.