On September 4, 2024, the company LetterOne announced the closing of a deal that saw it acquire a 14.87% stake in the London-listed oil and gas company Harbour Energy for 11.2 billion US dollars. Even though LetterOne is not a sanctioned company, it is indeed partly owned by sanctioned Aven and Russian billionaire mikhail Fridman.
The UK Government’s decision relates to the acquisition of shares consisting of non-quoted convertible non-voting ordinary shares with preferential rights. According to the terms of the transaction LetterOne will not have voting rights in the company Harbour Energybut it will receive a portion of Harbor’s profits as a dividend. Together with this decision, Great Britain has also introduced amendments to the sanctions regulation, which refer to legal services and the implementation of trade controls.
LETA has already reported that Aven and Fridman have been sanctioned by the european Union, the United States, Great Britain, and other countries. The Court of Justice of the European Union (CJEU) annulled the EU Council’s decision on the sanctions imposed on Aven and fridman on February 28, 2022, but Latvia has filed an appeal against this ruling.
The sanctions against Aven and Friedman are renewed every six months, and they have the right to appeal any such decision. This was not done before, but now Aven has contested the 2023 and 2024 sanctions decisions as well. The CJEU will consider the case on December 11, and Avena’s lawyers point out that with the start of the new process, the appeal submitted by Latvia has become useless, as actually these sanctions are no longer valid.In addition,they do not in any way change the overall decision of the EU on the imposition of sanctions.
Aven also has Latvian citizenship and since the Russian invasion of Ukraine in 2022, he lives in Latvia with his family. Friedman has returned to live in Russia.
**How might geopolitical tensions impact future investments in energy companies like Harbour Energy?**
Interview: Understanding LetterOne’s Acquisition of Harbour Energy and Its Implications on the energy Sector
Time.news Editor: Thank you for joining us today. We’re here with Dr. Elena Petrova, an expert in international business and energy economics, to discuss the recent acquisition of a significant stake in Harbour Energy by LetterOne. Dr. Petrova, can you start by explaining the context of this acquisition?
Dr. Elena Petrova: Certainly! On September 4, 2024, LetterOne, a company partly owned by sanctioned individuals Mikhail Fridman and German Aven, announced the acquisition of a 14.87% stake in Harbour Energy for approximately $11.2 billion. While LetterOne itself is not sanctioned, its ownership structure raises questions about the implications of this investment, especially given the political and regulatory environment surrounding the energy sector.
time.news Editor: It’s intriguing that LetterOne will hold non-voting shares in Harbour Energy. What does this mean for their role in the company?
Dr. Elena Petrova: That’s an excellent point. By acquiring non-quoted convertible non-voting ordinary shares with preferential rights, LetterOne can benefit from Harbour’s profits as dividends but lacks any direct influence over the company’s decision-making processes. This structure allows them to gain financially while sidestepping potential backlash from regulatory authorities due to their owners’ sanctions.
Time.news Editor: Speaking of sanctions, how does the UK government’s regulation play into this situation?
Dr.Elena petrova: The UK government’s recent amendments to sanctions regulations are crucial here. They have implemented stricter trade controls along with legal service regulations, which impact how companies like LetterOne can operate.As Aven and fridman have been sanctioned by multiple jurisdictions, this acquisition could lead to further scrutiny of LetterOne’s activities and its owners’ influence on international markets.
Time.news Editor: There’s a lot of back-and-forth regarding the sanctions on Fridman and Aven. Can you elaborate on the European Union’s stance and the related legal proceedings?
Dr. Elena Petrova: Yes, indeed.The European Union had sanctioned both Fridman and Aven post-invasion of Ukraine, aiming to restrict their economic power. However, in February 2022, the Court of Justice of the European Union annulled these sanctions, which has allowed Aven to contest the more recent sanctions from 2023 and 2024. This legal tug-of-war is complex and is further complicated by Latvia’s appeal against the annulment, which is pending review by the CJEU.
time.news Editor: With Aven residing in Latvia and Fridman back in Russia, what might this mean for investor confidence in the energy sector, especially concerning geopolitical tensions?
Dr. elena Petrova: Investor confidence could be shaken as the perceived stability of investment in the energy sector is increasingly influenced by geopolitical dynamics. Companies navigating these environments must weigh both potential profits and regulatory risks carefully.The ongoing tensions in Eastern Europe and the unpredictable nature of sanctions can lead to volatility, making strategic investments more challenging.
Time.news Editor: For readers who are interested in investing in similar sectors, what practical advice would you provide?
Dr. Elena Petrova: I would advise investors to stay informed about the geopolitical landscape and understand the legal frameworks affecting their investments. Diversifying investments to include entities with stable political backgrounds and assessing the regulatory environment can definitely help mitigate risks. It’s essential to consult with financial experts and legal advisors who specialize in international trade and sanctions compliance to navigate these complexities effectively.
Time.news Editor: Thank you, Dr. Petrova, for sharing your insights on this vital topic. This acquisition by LetterOne certainly opens several discussions about risk management and compliance in the energy sector moving forward.
Dr.Elena Petrova: Thank you for having me. It’s a pleasure to discuss these pivotal issues impacting the energy market and investor strategies.
conclusion:
The recent acquisition of Harbour Energy by LetterOne is emblematic of the complexities faced within the energy sector, particularly when influenced by geopolitical tensions and sanctions. As companies and investors navigate this landscape, understanding the implications of corporate structure and legal frameworks is critical to making informed decisions.