THE NEW RUSSIAN EMPIRE - 2

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Russian oligarch Mikhail Fridman's investment fund said Wednesday it sent a "detailed response" to U.K. government objections to its deal to take over offshore natural-gas fields amid a period of icy relations between Moscow and the West.

A spokesman from the U.K.'s Department of Energy and Climate Change said it would consider the "representations" by Mr. Fridman's LetterOne Group and respond in due course. The spokesman didn't give a time frame for when DECC might respond or reveal the contents of the proposal.

LetterOne said in an email that it would "leave no stone unturned" in its efforts to find a solution.

The U.K. objected to LetterOne Group's March 2 purchase of stakes in 13 British North Sea gas fields—part of a $5.7 billion deal for German utility RWE AG's oil-and-gas arm, Dea—citing potential U.S. or European sanctions being filed against Mr. Fridman in the future over Russia's involvement in war-torn Ukraine. The government gave Mr. Fridman a week to make changes.

Neither Mr. Fridman nor his partners are currently sanctioned.

The confrontation comes amid heightened tensions about Russian ownership of energy assets in Europe as the Ukraine conflict drags on. Sanctions against Mr. Fridman or his partners could result in the shutdown of the North Sea gas fields at a time when the U.K.'s domestic output is declining and the country is becoming more dependent on energy imports.

The gas fields Mr. Fridman acquired produce between 3% and 5% of U.K. gas supplies.

Mr. Fridman's group had previously proposed keeping the U.K. assets in a separate legal entity, called a stichting, that would shelter the gas fields from the effect of sanctions. The fund pointed to European refining company Tamoil's successful use of a stichting that allowed operations to continue when sanctions were imposed on its Libyan owners in 2011. The fund also included a provision for RWE to buy back the gas fields in the event of sanctions.

At the time, Britain's Energy Secretary Ed Davey said the proposed structure didn't alleviate his concerns.

LetterOne had previously said it could take legal action and seek compensation if the government followed through on its threat to require a further sale of the stakes in the gas fields.

LetterOne's acquisition of Dea gave it oil and gas fields in several countries including the U.K., Denmark, Norway, Germany and Egypt. The company produces around 100,000 barrels of oil equivalent a day.

wsj.com