London has said it is ready to force Mikhail Fridman to sell his recently acquired oil and gas fields in the North Sea. Downing Street has given the Russian billionaire one week to make his case.
The British government said on Thursday it is ready to force a Russian oligarch to sell a dozen North Sea oil and gas fields, less than a week after he finalized a5.1 billion euro ($5.7 billion) deal with German utility giant RWE
The threat comes a day after British Energy Secretary Ed Davey gave Russia's second-richest man, Mikhail Fridman, seven days to explain why his investment vehicle LetterOne should be allowed to retain ownership of the energy assets, which were tied to this week'stakeover of the RWE subsidiary Dea
"If assurances are not supplied, we've set out our position and our intention to act, and [Prime Minister David Cameron] entirely agrees with that," a Downing Street spokesman told reporters in London on Thursday.
Fridman's acquisition comes at a particularly fickle time for the British Prime Minister, who is up for re-election in two months.
Cameron has been one of the EU's most vocal critics of Russian President Vladimir Putin's involvement in the Ukraine crisis, and has been a particularly hawkish proponents of tough sanctions against the Kremlin.
Allowing a Russian tycoon to take over control of UK energy assets when relations with Moscow have plunged to their lowest since the Cold War could prove costly for Cameron and his Conservative Party come a general election in May.
At the same time, however, the government fears that the North Sea fields, which account for 3 to 5 percent of UK gas production, could be shut down if the sanctions against Russia were to be tightened even further. Forcing Fridman to sell could be one of Cameron's last face-saving solutions.
Wooing Downing Street
The Ukraine-born billionaire, who made a fortune in Russia after the collapse of the Soviet Union, has assured Downing Street that his LetterOne Group is eager to negotiate a deal that would allow it to keep its assets.
"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 consoritum said on Wednesday.
One such step has been to group the disputed assets in a Dutch foundation, which Fridman argues would insulate them from potential sanctions against Moscow.
The billionaire has also tried to woo Britain's political establishment, announcing former BP CEO John Browne, a member of the House of Lords, as the head of its energy division.
But London has rejected such attempts to allay its worries, pointing to several firms and people linked to the Russian energy industry that have also been targeted by international penalties.
Lawsuits as leverage
Fridman is now threatening to go to court if Britain tries to stop the deal. In a letter to British authorities on Monday, LetterOne CEO warned the company would seek compensation and threatened to shut down production if Britain takes action - "the very consequences (Britain) is trying to guard against."
The Dea sale is a key element in the Kremlin ally's plans to create a new international oil company. It required the approval of 14 countries where Dea operates. Germany gave its approval in August.
RWE announced a year ago it planned to sell the oil and gas producer, which pumps out the equivalent of some 100,000 barrels a day.
The German energy giant is saddled with about 30 billion euros in debt and has been hit hard by Berlin's plans tophase out nuclear power as part of a green energy initiative
pad/cjc (AP, dpa, Reuters)