Fridman gets given seven-day reprieve by UK to save North Sea gas deal

The British government has set Russian billionaire Mikhail Fridman a seven-day deadline to explain why it should not block his purchase of a dozen North Sea gasfields this week from Germany’s RWE as part of a €5bn deal.

Ed Davey, Britain’s energy secretary, wrote to LetterOne Group, Mr Fridman’s $29bn investment fund, on Wednesday saying he would be “willing to consider further representations” from the company as to why the government should not demand a further sale.

The Department of Energy and Climate Change said in a statement that LetterOne had been given seven days “to explain why the secretary of state should not now proceed to issue notices under the licences to require further changes of control”.

The fields, which comprise the British part of an international portfolio of oil and gas assets acquired with LetterOne’s acquisition of RWE Dea, account for 3 to 5 per cent of UK gas production. The government fears they could be shut down if sanctions against Russian companies and individuals were to be tightened as a result of the conflict in Ukraine.

“Protecting these assets is the secretary of state’s priority,” the department said.

Mr Davey intervened in the purchase of RWE Dea, the German utility’s oil and gas arm, at the weekend, when he said he was “minded” to require the Russian businessman to sell Dea’s North Sea gasfields to “a suitable third party”.

LetterOne, which formally bought the assets on Monday, promptly threatened to take legal action.

The British government’s concern centres on the risk of a repeat of what happened when sanctions were imposed on Iran, which led in 2010 to the shutdown of the North Sea’s Rhum field, co-owned by BP and the National Iranian Oil Company. Output only restarted last October.

Mr Davey had last year resisted a demand from the buyers for a “letter of comfort” reassuring them that there would be no intervention after the North Sea sale.

LetterOne, based in Luxembourg, argues that the Rhum field is not a relevant analogy, contending that no sanctions have been imposed on the group — unlike the National Iranian Oil Company. It says it has set up a mechanism to cope with that eventuality, using a Netherlands-based entity.

The Dea assets are part of a portfolio that the group’s new $10bn fund, L1 Energy, will use as a cornerstone to build an international oil and gas business. Mr Fridman has recruited Lord Browne, former chief executive of BP, to run L1 Energy.

A spokesman for LetterOne said: “We are keen to work with the government and will leave no stone unturned to find a solution in the interest of everyone concerned.”

The group earlier this week said it was “deeply disappointed” with Mr Davey’s stance, describing the government’s position as “not rational”. It has threatened to launch a judicial review — and possibly seek compensation — should the energy secretary block the deal.