North Sea Oil
RWE has sold its North Sea oil and gas assets to a Russian billionaire (Reuters)

Russian billionaire Mikhail Fridman has been given seven days to convince the UK government that he can operate newly-acquired North Sea oil and gas assets without the risk of future sanctions halting production.

In an unprecedented move, the UK voiced its intention to block the oligarch's investment firm LetterOne from acquiring certain of the oil and gas assets of German utility RWE, which are located mainly in the southern part of the North Sea.

The department of energy said in a statement: "Ed Davey has given them seven days to explain why the Secretary of State should not now proceed to issue Notices under the Licences to require further changes of control.

"Protecting these assets is the Secretary of State's priority."

The deal, worth €5.1bn (£3.69bn), has gone ahead, despite the UK's recalcitrance; it chose not to provide a so-called "letter of comfort" approving the transfer of assets. Then, at the eleventh hour, Energy Secretary Ed Davey said the structures put in place to "insulate" the UK's oil and gas industry from the effect of sanctions were not "adequate" and that the sale of the assets to a third party would be the preferred option.

LetterOne responded with a threat of legal action against the UK government, armed with legal opinion from members of the House of Lords. LetterOne's L1 Energy division is chaired by energy industry heavy-weight Lord Browne, the former head of BP.

Fridman's company has put in place a Dutch Foundation or "Stitching", which would assume control of the unit if sanctions were imposed upon L1 or Fridman himself.

L1's chief executive Jonathan Muir said at the start of the year: "In the unlikely event that sanctions on LetterOne or its owners were imposed, RWE will retain the obligation to re-purchase the UK business during the first year post completion of the sale of RWE Dea.

"If triggered, this acquisition would be carried out on the basis of a pre-determined purchase price formula in order to proceed with a subsequent on-sale of the UK business to a independent third party buyer."

Despite the need for rapid investment in the ailing North Sea energy sector, "the structure may be deemed to be an attempt to circumvent (future) sanctions in advance of their being imposed", according to letters exchanged between LetterOne and the Energy Secretary.

The EU, Germany and Norway have all given the RWE deal their approval.

Fridman, 50, is ranked by Forbes as the world's 68th richest person with a fortune of $14.6bn, while his business partner German Khan, 53, is ranked 133rd with $9.5bn.