2015-09-08 18:11:00
GAZPROM'S UK DEAL
Ministers are to examine a deal that hands Russia's Gazprom interests in the UK North Sea, amid calls for Britain to send "a clear message" to Vladimir Putin over Ukraine.
The state-backed energy group's purchase of a 50 per cent stake in BASF subsidiary Wintershall's North Sea business, which includes the Wingate gas platform and several offshore UK exploration licences, will be an early test for energy secretary Amber Rudd.
Her Liberal Democrat predecessor Ed Davey, backed by Downing Street, forced Russian billionaire Mikhail Fridman to put a dozen gasfields acquired by his $10bn fund L1 Energy up for sale.
Gazprom, which will take the North Sea stake as part of a revived multibillion-euro asset swap with BASF, the German chemicals group, has yet to seek a "letter of comfort" from the Department of Energy and Climate Change.
The company is not under any obligation to seek such an assurance but could find itself wrongfooted by any opposition if were ministers unhappy.
"We will examine the detail of this deal closely to consider its implications, as we do for any deal involving assets within British waters," a department official said.
Sir Gerald Howarth, who chairs the all-party Ukraine group, said the response to the Gazprom deal should be "consistent" with how LetterOne, Mr Fridman's investment vehicle, was treated.
"The message that we send to President Putin has to be a consistent one," said the former defence minister. "There is no evidence that they are calling the dogs off in Ukraine."
Sir Gerald said the government needed to remain focused on the Ukraine issue, despite other major foreign policy issues.
"Things like the migrant crisis consume the entire effort of government, people literally at their desks sometimes at night dealing with them," he said.
"But what is going on in Ukraine is very serious, with a major impact on Europe, and if we are serious we need to keep sending a clear message to Putin."
The Gazprom deal may, in theory, raise similar concerns to those voiced by senior UK ministers, in relation to L1, about the potential vulnerability of a Russian takeover of North Sea assets as a fall in oil and gas prices encourages producers to offload their operations.
Their concerns centre on the risk of a repeat of what happened when sanctions were imposed on Iran, which led in 2010 to the shutdown of the North Sea's Rhum field, co-owned by BP and the National Iranian Oil Company. Output only restarted in October.
Ministers have argued that there is unlikely to be any swift reversal of sanctions on Russian companies and individuals and, to the contrary, western economic penalties are more likely to be increased.
Wingate, which was brought on stream in 2011, is an unmanned platform producing about 2.5m cubic metres of natural gas a day, less than the combined production of the fields L1 bought from Germany's RWE Dea business.
The deal with BASF gives Gazprom full control of a jointly operated European gas trading and storage business, the main strategic rationale.
But it also gives the Russian group a significant interest in oil and gas production in western Europe. Wintershall operates 22 platforms in the North Sea, the vast majority of which are in waters off the Netherlands.
A person familiar with Gazprom's thinking said the speed at which the BASF deal had been done meant it had not applied for the letter of comfort. The asset swap has been approved by the European Commission.
ft.com
-----
More:
