LetterOne Ready to Take Step Back From UK North Sea, Pending Elections?
LetterOne is reportedly ready to launch the sale of 12 oil and gas assets in the North Sea, ending the arm-wrestling with the British government, which wrote in February that additional sanctions could have had negative consequences on the operations.
As a consequence, in March, the Department of Energy & Climate Change required the Russian company to ‘arrange a further sale to a suitable third party,’ threatening to revoke the assets’ licences. Now the fund led by Mikhail Fridman seems ready to sell the fields acquired earlier this year from RWE.
Previous rumours indicated that Mikhail Fridman would have not taken a decision before the results of the British general election to be held on Thursday. In this sense, it is possible that the future of those assets still depends on the outcome of the election for the 56th Parliament of the United Kingdom.
According to Reuters, Morgan Stanley is advising the sale which is expected to fetch up to $ 1 billion. The news agency also reported that LetterOne would sell the assets individually, one by one.
The problem here is related to the market conditions and to a possible instability in the aftermath of the elections. On the other hand, if things stand as they are now, there could be some increase in investments in the British waters.
In his last highly political Budget Speech in March, Chancellor George Osborne announced a £1.3 billion support package to the oil and gas industry.
On Wednesday, the gas association Oil & Gas UK said that efficiency has to be the name of the game, and that Osborne’s last message could pave the way for growing production.
“Tax reforms announced in the Government's 2015 Budget and the establishment of the new regulator, the Oil and Gas Authority, have laid the foundations for the regeneration of the North Sea and the industry is now building on this by delivering the cost and efficiency improvements required to secure its long term future” Oonagh Werngren, Oil & Gas UK’s operations director, commented in a note, also claiming that the UK still holds significant reserves of up to 23 billion barrels of oil and gas on its Continental Shelf.