Russian tycoon Fridman buys Norwegian oil and gas assets for $1.6 bn

Just two days after selling his UK North Sea natural gas assets to Swiss chemicals group Ineos, Russian billionaire Mikhail Fridman yesterday has struck a deal to buy stakes in German utility giant E.ON AG's Norwegian oil and gas fields for approximately $1.6 billion.

DEA Deutsche Erdoel AG, the German subsidiary of Fridman's LetterOne investment fund, will acquire equity interests in 43 licences in the Norwegian continental shelf including working interests in three production fields with 28 per cent in Skarv, 30 per cent in Njord and 17.5 per cent in Hyme to add around 45,000 boe per day of output.

None of the production fields are operated by E.ON. Norway's Statoil is the operator of Njord and Hyme, while Skarv is operated by British giant BP.

The purchase price includes $100 million of cash on the balance sheet of E.ON's Norwegian operations in the beginning of the year, DEA said.

It is apparent that the Russian tycoon is looking for attractive assets taking advantage of the slump in crude oil prices to fulfill his global energy ambitions, despite his recent setback in the UK.

On Monday, Fridman, who acquired the UK gas fields in March from German utility giant RWE AG, was forced to sell them in the face of  UK government ultimatum to sell the assets in six months or face cancellation of the operating licences for the fields. (See: Swiss chemicals giant Ineos buys UK North Sea gas assets for $750 mn)

The government cited western sanctions against Russia and their potential impact on the fields' operation due to Russia's involvement in the unrest in Ukraine.

Hamburg-based DEA has been present in Norway over four decades.  It's subsidiary DEA Norge holds 31 licences including working interests in a number of production fields including Snorre, Gjoa, Knarr etc and also Zidane field, which is currently being considered for development.

DEA chairman Lord Browne said, ''This acquisition is the first step in DEA's new growth strategy. DEA has access to substantial financial resources, and I expect the company to make further investments in the Norwegian continental shelf, as well as in its other core areas.''

The acquisition will expand DEA's reserves and significantly increase production and add growth opportunities, Thomas Rappuhn, CEO of DEA said.

It will more than double DEA's current production in Norway to 75,000 barrels oil equivalent (boe) per day, besides providing a major thrust forward in achieving the company's growth plans.

The company will continue to purse M&A opportunities in Europe and North Africa, DEA said.

The transaction is subject to approvals from Norwegian authorities and the European Commission.

Welcoming the deal, the Norwegian oil & energy minister Tord Lien said the application for approval would be handled ''the usual way.''

The German utility giant is shedding assets under its restructuring plan.

"The successful sale of our E&P business in Norway is a landmark transaction in the sector," Michael Sen, E.ON's chief financial officer, said in a statement.