One of Russia’s richest men has confirmed a £4.2billion deal to snap up German energy giant RWE’s North Sea assets.
LetterOne, an investment fund set up by Mikhail Fridman and German Khan last year, has agreed the deal to buy RWE’s Dea oil and gas business, which includes taking around £500million debt.
It marks the first big spend for LetterOne’s L1 Energy vehicle since Mr Fridman and Mr Khan launched the group to invest some of the fortune they made through selling off their stake in the TNK-BP Russian oil venture last year.
“This agreement is a major milestone in delivering our announced strategic realignment of the group,” said RWE chief executive Peter Terium.
“In addition, it is a further and essential step towards improving our financial strength.”
The companies confirmed the deal subject to regulatory approval, saying that terms and “major contractual conditions” had been agreed.
Further details on the sale are expected to be announced this week.
Earlier this month, the Press and Journal reported that Mr Fridman and Khan were in pole position to buy the RWE Dea assets, after RWE announced it was looking to sell its oil and gas business to cut debts.
The German utilities firm posted its first loss since 1949 last year, with a £2.3billion hit and debts of £25billion.
RWE Dea operates the Breagh field, which came onstream last year, along with the Clipper, Cavendish, Windemere and Topaz fields gas fields across the North Sea.
Breagh is one of the crown jewels of its portfolio, despite being hit by a series of cost overruns and technical problems, with production of around 118million standard cubic feet of gas per day being produced from the field – one of the largest new North Sea projects in recent years.
It also has interests in the Atlantic margin west of Ireland, and in gas fields across the Norwegian and Danish North Sea regions – with around 190 stakes in projects around the world.
Mr Fridman, thought to be Russia’s fourth-richest man, co-founded one of the country’s biggest private consortiums, Alfa Group, in 1989.
He and his partners, including German Khan, sold the TNK-BP joint venture to Russian state-run Rosneft in a £33billion deal in 2012.