Fridman and Khan buy RWE oil and gas assets despite UK objections

By bne IntelliNews March 3, 2015

bne IntelliNews -


German utility RWE has completed the $5.6bn sale of its oil and gas unit Dea to LetterOne investment fund, which is controlled by Mikhail Fridman and German Khan, the Russian billionaires behind Alfa Group. However, serious doubts remain whether British North Sea assets owned by Dea will be included in the deal, after objections by the UK government. 

Mikhail Fridman, chairman of LetterOne, hopes to use Dea as a springboard for creating an international oil and gas extraction company. He has recently appointed Lord Browne, former CEO of BP, to head LetterOne's $10bn energy fund L1 Energy. Fridman and Browne were longtime shareholder rivals at Russian oil producer TNK-BP until the oligarchs sold their shares for $14bn in 2013, and BP sold out to Rosneft. 

However, L1 Energy's plans for the North Sea have been thrown in jeopardy by UK Energy Secretary Ed Davey's refusal to approve the sale of 12 natural gas fields, which represent about 20% of Dea's assets. Davey said in a statement that he “would be minded to require" arrangements for a further sale of the stakes in the fields to a third party, out of concern for their continuous future operations. The implication was that LetterOne could potentially become a target of expanded Western sanctions against Russia, which would potentially halt the operation of the fields.

If the UK goes ahead with the requirement to extract the British assets from Dea and sell them to a third party, LetterOne said it would seek a judicial review, including compensation for any damage following from a revaluation of the assets.

Jonathan Muir, CEO of LetterOne, said that RWE and LetterOne were “deeply disappointed and concerned”, given the “extensive efforts” they had made to meet the concerns over the British assets. Reportedly LetterOne and RWE had pledged to keep the assets separate for a number of years and committed the German energy company to buy them back should any sanctions be imposed on LetterOne's owners by the EU or US.




Notice: Undefined index: social in /var/www/html/application/views/scripts/index/article.phtml on line 278

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more