The government is under increasing scrutiny after a company partially owned by two sanctioned Russian oligarchs was permitted to become a shareholder in the UK’s largest North Sea oil producer. Critics argue that individuals with ties to oligarchs should not be involved in critical national assets.
The company in question, LetterOne, co-owned by oligarchs Mikhail Fridman and Petr Aven, was able to acquire nearly 15% of Aberdeen-based Harbour Energy. This came after Harbour completed an £8.5bn acquisition of the German company Wintershall, which LetterOne partly owned. Although LetterOne is not directly sanctioned, its shares in Wintershall were exchanged for shares in Harbour as part of the deal.
Harbour Energy, which has criticized the government’s windfall tax, is expected to expand its oil and gas production by an additional 500,000 barrels per day as a result of the transaction. Under the terms of the deal, LetterOne, chaired by former Labour minister Mervyn Davies, will receive a portion of Harbour’s profits in the form of dividends.
Fridman and Aven remain major shareholders, although their stakes were frozen when the UK and EU imposed sanctions following Russia’s invasion of Ukraine in 2022. Davies has stated that the oligarchs no longer have any involvement or influence over the business, including voting rights or dividends related to Harbour Energy.
In 2022, the UK government used the National Security and Investment Act to force LetterOne to sell its stake in broadband provider Upp, citing national security concerns. However, the Harbour-Wintershall deal was approved under the same act, with the government retaining the right to intervene if LetterOne’s ownership stake or influence increases.
Fridman and Aven are expected to be removed from the EU sanctions list after a successful legal challenge, though they remain under UK sanctions. Alicia Kearns MP, the shadow minister for foreign affairs, criticized the Labour government’s approval of the deal, calling it “astounding and appalling.” She urged the government to reverse its decision, citing energy security as a crucial national issue, especially in light of recent Russian attacks on Ukrainian civilians.
Louis Wilson from Global Witness echoed these concerns, arguing that sanctioned oligarchs should not be involved in the UK’s energy sector, especially given that they were previously deemed a security risk over broadband ownership.
A spokesperson for LetterOne stated that the company is “proud to be part of a stronger UK energy business” that will contribute to energy security, investment, job creation, and the UK’s energy transition goals.
