A decision to challenge Russian billionaire Mikhail Fridman over his purchase of a dozen North Sea gasfields was taken at the highest levels of the British government amid expectations that Moscow is likely to face tougher sanctions over the conflict in Ukraine.
The stance, adopted after a recent meeting of the National Security Council, which is chaired by the prime minister and includes his top defense staff, reflects the concern that U.K. oil and gas production could be affected by the international crackdown on Russia.
Ministers have concluded 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.
The decision also highlights broader concern voiced by senior U.K. ministers about the potential vulnerability to a Russian takeover of other North Sea assets as falling oil and gas prices encourage some existing operators to offload their operations.
The showdown burst into the open at the weekend when Ed Davey, the U.K.'s energy secretary, intervened in Mr Fridman's 5 billion euro purchase of RWE Dea, the oil and gas arm of Germany's RWE. He said he was "minded" to require the Russian businessman to sell Dea's North Sea gasfields to "a suitable third party".
Mr Fridman's investment vehicle, LetterOne Group, which formally bought the assets on Monday, promptly threatened to take legal action.
A senior western oil executive said the UK was entering "uncharted territory" by intervening publicly in a corporate transaction over fears of the effect of future sanctions against Russia.