L1 Energy looks into UK North Sea asset sale

Caitlin Morrison
Follow Caitlin
THE NORTH Sea is likely to undergo significant change over the next few years, as a number of the big players move to offload their interests in the region.

L1 Energy, a subsidiary of Russian tycoon Mikhail Fridman’s Letter One Group, is reported to have appointed Morgan Stanley to advise on the sale of its North Sea oil and gas assets.

L1 bought the assets earlier this year as part of its €5bn (£3.6bn) deal to buy the energy arm of German firm RWE.

However, then energy secretary Ed Davey said at the time that he was “minded to require the companies to arrange for a further sale” of the UK portion of RWE Dea.

Davey cited concerns around the Western sanctions that have been applied to several Russian firms in the wake of the crisis in Ukraine.

Fridman’s L1 had previously said it was considering bringing legal action against the UK government if it pushed ahead with its plans, but the firm is currently considering a range of options, including a possible sale.

The company’s North Sea holdings are reportedly worth a total of $1.2bn (£78m).

Meanwhile, German firm E.On and France’s Total are both looking for prospective buyers for their North Sea assets too, and Shell announced the sale of its interests in the region in February.

The mass exodus from the North Sea has gained momentum over the past six months, with the oil price yet to make any significant recovery.

The benchmark Brent crude price more than halved over the past year, dropping to around $45 per barrel, although it is now hovering around $65.

Last week’s election result was welcomed by industry group Oil and Gas UK (OGUK) as potentially good news for the North Sea.

OGUK boss Deirdre Michie said the group had “good cooperative relationships” with both the UK and Scottish governments, and added: “We look forward to continuing this constructive way of working with the new UK government.”