British Blockade

The Autumn of the Oligarch

No Russians allowed? A supply ship approaches a Dea oil rig. Source: obs
RWE is having to navigate some difficult political waters.
  • Why it matters

    Why it matters

    RWE needs the funds from the sale of Dea to plug debt holes, but the ongoing crisis in Ukraine and the resulting international sanctions against Russia could end up putting the kibosh on the deal.

  • Facts

    Facts

    • RWE needs the permission of 14 countries to sell its oil and gas drilling subsidiary Dea.
    • The UK has so far refused to sign off the deal.
    • Its approval is the last hurdle in the sale to a fund owned by Russian Oligarch Mikhail Friedman.
  • Audio

    Audio

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The German energy giant RWE is facing a nerve-jangling political waiting game over its sale of the oil and gas company Dea.

Britain, where Dea is extracting gas off the coast, has blocked a fund controlled by the Russian investor Mikhail Friedman from buying the company, according to information received by Handlesblatt.

The British energy minister, Ed Davey, is refusing to grant his approval, sources close to the deal said. He reportedly has serious concerns about the sale of reserves of raw materials to a Russian investor, given the crisis in Ukraine and the international sanctions against Russia. A ministry spokesman declined to comment.

RWE said that the company is still working on finalizing a deal this year, but the signs are not good for the struggling energy company. Last month, RWE conceded that the decision in Britain had been delayed. Now it seems the ministry has made a decision, at least a tentative one, and it is not in favor of the sale.

This is causing RWE chief Peter Terium serious problems. He planned to use the income from the sale of Dea to reduce the company’s debts. The stock price of RWE on Thursday dropped by about 3 percent.

 

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In March, Mr. Terium announced that RWE would sell Dea to Letter One, a fund based in Luxemburg. The deal was immediately questioned because Letter One is controlled by Mr Friedman’s Russian Alfa Group, and the conflict in Ukraine was flaring up at the time, with Russia being increasingly hit by sanctions.

The German economy ministry also critically examined the transaction, but gave its approval in August.

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