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It didn’t take Russian billionaire Mikhail Fridman long to restore his presence in the North Sea oil industry. At the start of this week his investment company, LetterOne, said it had agreed to sell its holdings in the sea’s British waters. By midweek he had a deal to buy oil and gas operations in nearby Norwegian territory.

The German utility E.ON, based in Duesseldorf, said Oct. 14 that it would sell these assets to Fridman for $1.6 billion as part of a restructuring plan designed to keep the company profitable at a time of severely depressed oil prices.

The reorganization includes a reduction of its holdings in energy exploration and production (E&P). E.ON has said it has found that it isn’t big enough to conduct such activities profitably. E.ON also plans to shed its energy trading departments and most of its power generating activities next year and combine them in a new company, Uniper.

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“The successful sale of our E&P business in Norway is a landmark transaction in the sector,” E.ON’s chief financial officer, Michael Sen, said in a statement. “As an important step in our overall financial framework, it provides flexibility to implement our strategy and reposition the group.”

E.ON’s North Sea assets are known as E.ON E&P Norge and included 43 drilling licenses. Only a few of these, however, are in production currently, and E.ON operates none of them. The largest of the fields off Norway include the Scarv field, operated by the British oil giant BP, and Njord, operated by Statoil, Norway’s state-owned energy major.

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LetterOne became a leading contender to buy E.ON’s offshore Norwegian assets after Fridman, under pressure from the UK government, sold his gas fields in the British waters of the North Sea for what is believed to be $750 million.

Fridman acquired the fields in March as part of a transaction to buy DEA Deutsche Erdoel, another German utility. But Britain’s government refused to recognize the sale because Fridman and his partners may one day be the targets of expanded Western sanctions against Russian interests due to Moscow’s involvement in the Ukraine conflict.

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The offshore Norwegian fields sold by E.ON will now be operated by DEA. The utility’s CEO, Thomas Rappuhn, praised the deal as “a perfect fit to our renewed business strategy,” and said his company will look to buy further assets in North Africa and Europe.

An E.ON spokesman said the company expects to close the sale by the end of this year if it receives the approval of regulatory authorities for Norway and the European Commission. And despite the risk that Fridman still may one day be a target of further Western sanctions, Norwegian Petroleum and Energy Minister Tord Lien said his agency will judge the transaction as it would any other.

“An application for such an approval will be handled the usual way,” Lien said in a statement. “The restrictive measures apply [only] to activities in Russia. That international firms wish to invest on the Norwegian continental shelf is good.”

By Andy Tully of Oilprice.com

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