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RWE-LetterOne deal

January 16, 2015

German utility company RWE has said it would complete the sale of its oil business to LetterOne, a group of investors around Russian oligarch Mikhail Fridman. British objections had been considered, it said.

https://p.dw.com/p/1ELsV
RWE Dea oil rig dpa/lno
Image: picture-alliance/dpa

RWE reported Friday it was aiming to finalize the sale of its Dea oil and gas business to LetterOne, a company controlled by Russian oligarch Mikhail Fridman. It added the deal would be completed by March at the latest.

Under a revised agreement, LetterOne would keep operations by Dea in the North Sea separate from other activities for a number of years, RWE said on its website.

This is because the UK had objected to the sale, following the sanctions the West imposed on Russia over its perceived role in the Ukraine crisis. RWE said it hoped the revised deal would ensure the government in Britain would not confiscate Dea's North Sea assets, should more sanctions come into force.

Making precautions

LetterOne for its part covered itself against the contingency of a further worsening in relations between Russia and the West through a provision that RWE would have to buy back the Dea UK unit, if sanctions were imposed against LetterOne or its proprietor.

RWE CEO Peter Terium praised the deal and called it vital for his company. "The sale of Dea is a milestone for the implementation of our in-house strategy and towards a sounder financial footing," he said in a statement.

Germany's energy transition

RWE has been struggling to make a profit. Part of its difficulty stems from a government-imposed obligation to close its nuclear power stations over the next several years, in the context of Germany's planned energy transition toward a wholly renewable energy powered future by mid-century.

The Dea sale will help the firm pay down some of its 30 billion euros ($35 billion) in debt. The deal with LetterOne will bring in about 5 billion euros.

hg/nz (dpa, Reuters)