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A company part-owned by sanctioned Russian oligarchs has obtained a 14.87% stake in one of the UK's largest oil producers.
Investment group LetterOne (L1), partially owned by Russian oligarchs Petr Aven and Mikhail Fridman, has obtained a 14.87% minority share in Harbour Energy.
Harbour Energy operates in Norway, South East Asia, Germany, North Africa and Argentina.
Despite being sanctioned by the UK Government, Fridman and Aven have not received any profits from LetterOne.
The pair did, however, fight off sanctions imposed by the EU after a court victory in April, although they remain under ‘punitive measures’, or actions designed to deter future misconduct. That case is now being reviewed.
In 2022, under the UK’s last Conservative Government, Fridman, Aven and another man, German Khan, were sanctioned and subject to an asset freeze and travel ban. The statement issued at the time said the three men have a combined estimated worth of more than £100bn ($131bn).
According to several UK media reports, the oligarchs have no communication with LetterOne.
LetterOne owned a portion of Germany’s Wintershall, and its shares have now been swapped for shares in Harbour Energy.
LetterOne previously purchased some of the oil and gas production assets of Wintershall DEA from the chemicals giant BASF, with the investment company subsequently receiving the Harbour stake.
Certain Wintershall assets tied to Russia, such as its joint venture with Gazprom, are excluded from the agreement and still belong to BASF.
According to reports, L1, in partnership with BASF, has now transferred most of Wintershall Dea’s upstream business to Harbour Energy for a total consideration of $11.2bn.
Following the transaction, L1 holds a 14.87% stake in Harbour, consisting of 251,488,211 non-voting, non-listed convertible ordinary shares with preferential rights. These preferences potentially offer a 13% premium on dividends paid.
According to the BBC, L1 maintains diverse assets globally valued at $18bn, including the health food retailer Holland and Barrett.
Fridman and Aven were subjected to sanctions in March 2022, shortly after Russia invaded Ukraine. Although they possess just under 50% of the group, Andrei Kosogov, another Russian individual who has not been sanctioned, holds the majority of the remaining shares.
There is a growing worry in the UK about Russian oligarchs' ownership of critical infrastructure, which could be strategic for the government. As per Euronews, the acquisition of Harbour Energy could also be perceived as a risky move for the country's energy security.