German utility RWE says it has already sold its Dea oil production subsidiary to a group headed by a Russian oligarch. Britain had expressed worries about the deal due to Russia's role in the Ukraine crisis.
German energy giant RWE says it has completed its 5-billion-euro ($5.6-billion)sale of its Dea subsidiary to a Russian oligarch despite the British government's renewed objections.
RWE announced a year ago it planned to sell oil and gas producer Dea to the Luxembourg-based LetterOne consortium headed by Mikhail Fridman, Russia's second-richest man. Twelve North Sea oil and gas fields make up about 20 percent of the transaction. Dea produces around 100,000 barrel equivalents a day.
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."
Carrot and stick
At the same time, in what may be a sign of Fridman's willingness to woo Britain's political establishment, the company also announced former BP CEO John Browne, a member of the House of Lords, would head its energy division.
Mikhail Fridman founded LetterOne in 2013 with the profits from selling his BP-TNK joint venture to Kremlin-controlled Rosneft
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. But in response to Russia's role in the Ukraine crisis, the British government expressed fears that "possible future sanctions" on Russian interests could bring production in the fields to a standstill.
The two firms announced a revised deal in January. At that time, RWE CEO Peter Terium described the Dea disposal as "an essential step towards executing our strategy and improving our financial strength."
But on Saturday, the British government said it would still not give it the all-clear.
In a statement, British Secretary of State for Energy & Climate Change, Edward Davey, wrote that if the deal went through "in its current form," he would call on the parties to sell the assets instead to "a suitable third party."
RWE shares rose 6 percent when the revised deal was announced - despite a price cut of 100 million dollars compared with the original March 2014 purchase agreement.
The new deal would keep the British assets separate from the rest of Dea. But it also obliged RWE to repurchase the business on the basis of an undisclosed "pre-determined purchase price formula" if sanctions were imposed within a year.
RWE is saddled by about 30 billion euros in debts and has been hit hard by Germany's plans to phase out nuclear power as part of a green energy initiative.
sgb/hg (Reuters, dpa)