Mikhail Fridman Beats UK on North Sea Oil Purchase, Dealing Blow to EU Russian Sanctions

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Russian billionaire Mikhail Fridman

UPDATE: German energy giant RWE plans to go ahead with the $5.9 billion sale of its Dea subsidiary to a Russian oligarch despite the British government’s renewed objections. (Deutsche Welle)

The British government would likely face legal action if it tries to stop Russian billionaire Mikhail Fridman from bidding for a number of North Sea energy assets, several media sources report.

The UK is concerned about the implications of the sale on European sanctions against Russia, seeing as Fridman is one of Russia’s tycoons associated with president Vladimir Putin’s.

The Wall Street Journal remarked that this showdown is erupting as tensions increase over the Ukraine conflict. The Ukraine, among other things, is also the transit point for Russian gas headed for western Europe.

It should be noted that, so far, Fridman’s businesses haven’t been sanctioned as part of the EU’s effort to force Russia out of the Ukraine.

According to the Financial Times, Fridman is creating a new group called L1 Energy, chaired by former BP chief Lord Browne, building on RWE Dea’s assets to create a global oil and gas company.

Lord Browne will give up his job at Riverstone, the private equity group, and at Cuadrilla, the UK shale explorer.

Fridman’s Luxembourg-based LetterOne Group is in the process of acquiring RWE Dea, an oil and gas subsidiary of German RWE, as part of a $5.59 billion deal to be finalized Monday.

RWE Dea owns 12 active oil and gas fields in the North Sea, as well as assets in Norway, Germany and Egypt.

Over the weekend, British energy secretary Ed Davey raised concerns “about the effect that possible future sanctions … may have on the continued operation of these twelve fields and the serious health and safety and environmental risks that may result.”

Davey said the proposal to keep the North Sea fields separate from LetterOne Group’s other energy businesses for the time being does not alleviate his concerns.

A UK government statement said: “If the proposed acquisition were to proceed in its current form, he [Mr Davey] would be minded to require the companies to arrange for a further sale to a suitable third party.”

The Financial Times noted that this UK warning constitutes the first time a western government has publicly intervened in a corporate transaction because of concerns over sanctions against Russia being tightened.

Mikhail Maratovich Fridman co-founded the Russian Jewish Congress in 1996, and is a major donor to the non-profit European Jewish Fund, which promotes inter-religious dialogue. He co-founded the Genesis Philanthropy Group, a social-investment fund focused on Russian-speaking Jewry which has also recently been linked to an initiative to award a million-dollar annual Nobel-style prize for Jewish contributions to humanity. Genesis has also funded the Nativ program that prepares non-Jewish Russian immigrants to Israel for conversion.

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