Investment firm LetterOne, owned in part by sanctioned Russian oligarchs Petr Aven and Mikhail Fridman, has acquired a minority stake (14.87%) in Harbour Energy, which is the UK’s biggest oil and gas company with operations in Norway, Southeast Asia, Germany, North Africa and Argentina.
Russian oligarchs Fridman and Aven are sanctioned by the UK government and do not receive any of LetterOne’s profits, however. The oligarchs are also not reportedly in contact with LetterOne, according to a BBC report.
Meanwhile, Harbour Energy recently bought a large portion of Germany-based Wintershall Dea’s upstream oil and gas facilities from the chemicals company BASF. This deal was worth $11.2bn (€10.14bn).
It was financed with the transfer of $4.9bn (€4.43bn) of hybrid and investment grade euro-denominated Wintershall Dea bonds, as well as an equity issuance of $4.15bn (€3.76bn) and a cash consideration of $2.15bn (€1.95bn).
Since LetterOne also partially owned Wintershall Dea, it received 251,488,211 Harbour Energy shares as part of the transaction, included in the $4.15bn (€3.76bn) equity issuance. BASF received the remaining shares from this issuance.
The shares allotted to LetterOne are convertible ordinary shares with preferential rights, also known as preference shares. They will not have voting rights, nor will they be listed or tradeable on any stock exchange or market. However, they will still receive dividends from Harbour Energy.
In case sanctions are lifted on Fridman and Aven, these shares could also possibly be changed to voting shares.
Following the Wintershall Dea deal completion, Linda Z. Cook, chief executive officer (CEO) of Harbour Energy, said in a press release on Tuesday: “We are extremely proud to have completed the Wintershall Dea acquisition.
“It marks our fourth and most transformational acquisition since we were founded in 2014, and is another big step forward as we continue to build a large, global independent oil and gas company focused on the safe and responsible production of the oil and gas the world still needs.
“We look forward to continuing to realise the potential of our company for all our stakeholders.”
A LetterOne spokesperson told Euronews: “LetterOne is committed to making long-term investments in businesses that matter. LetterOne is proud to be part of a bigger, stronger UK energy business that will bolster energy security, increase investment and create jobs while helping deliver the nation’s ambitious energy transition goals.”
Harbour Energy declined to comment.
LetterOne minority stake acquisition of Harbour Energy prompts backlash
Both Harbour Energy and the UK government have been criticised for allowing LetterOne to acquire a stake in the former. This is mainly due to the sanctions imposed on Fridman and Aven still being active, as well as the ongoing Russia-Ukraine war.
There have also been increasing concerns in the UK over allowing Russian oligarchs to own any part of key infrastructure, which may be strategically important for the government. With Harbour Energy being the UK’s largest energy company, this move could be seen as quite risky for the country’s energy security.
These concerns have also been echoed by a number of other European countries such as Finland and Norway, who are planning to impose stricter measures on Russians buying property in their countries.
Louis Wilson, head of fossil fuel investigations at campaign group Global Witness, told Euronews: “The UK government and Harbour should have run a mile from this deal. Sanctioned Russian oligarchs, who the Tories considered too dodgy to own a few thousand UK broadband connections, have been given a massive chunk of the UK’s biggest oil producer. Oligarchs have no place in the UK’s energy industry.”
