UK against LetterOne buying RWE Dea UK

LetterOne, an investment company run by the Russian billionaire Mikhail Fridman, has hit a stumbling block potentially preventing the company to complete the previously announced agreement to acquire RWE Dea oil company.

The two companies last year reached an agreement under which LetterOne, based in Luxembourg, would buy RWE Dea AG, an oil and gas business of Germany’s RWE. The German government gave the go-ahead in August last year.

In January this year, RWE AG and LetterOne Group agreed to complete the sale of RWE Dea in its entirety by early March 2015, at the latest for 5 billion euros.

In its statement in January, LetterOne Group said it would keep RWE Dea UK separate from the remaining RWE Dea activities for a number of years, in case the LetterOne Russian owners are put under sanctions.  RWE Dea UK owns twelve producing North Sea oil and gas fields.

“In the unlikely event that sanctions on LetterOne or its owners were imposed, RWE will retain the obligation to re-purchase the UK business during the first year post completion of the sale of RWE Dea. If triggered, this acquisition would be carried out on the basis of a pre-determined purchase price formula in order to proceed with a subsequent on-sale of the UK business to a independent third party buyer,” the company said at the start of the year.

UK wants third party

However, the UK government doesn’t seem to be convinced. In an announcement late Friday, the UK Energy Secretary Edward Davey, while acknowledging the proposal regarding RWE UK in case of sanctions, said that the proposal “does not adequately and surely alleviate those [the potential future sanctions effect] concerns and has notified the companies involved that if the proposed acquisition were to proceed in its current form, he would be minded to require the companies to arrange for a further sale to a suitable third party.”

British Lord becomes L1 CEO

In a statement issued today, LetterOne has said it has named Lord Browne of Madingley as the Chief Executive officer of L1 Energy.

L1 Energy is a subsidiary of Letter One, focused on opportunities in the global oil and gas sector by building a diversified portfolio of upstream assets through acquisitions and subsequent organic growth.

Edmund John Philip Browne, Laron Browne of Madingley, and the former CEO of BP, between 1995 and 2007, said:

“L1 Energy and I share a unique ambition: to build a brand new energy company at a time of great change in the sector. L1 Energy is investing for the long term with a team of world-class energy and financial professionals. I am delighted to join that team.

“Great partnerships are often formed in the face of adversity. I have known and worked with Mikhail [Fridman] for almost 20 years, on both sides of the negotiating table. He is tough, hardworking and one of the shrewdest and most focused businesspeople I know. He is intent on building a new diversified international business, and I am looking forward to working with him again.

“I have enjoyed my 8 years at Riverstone, and am proud of the firm’s record-breaking achievements across the conventional and renewable energy sectors. But it is now time to move back into a senior executive role in the energy sector. I am thrilled to be joining L1 Energy and am excited about the future.”

Offshore Energy Today Staff