The British Energy Ministry announced Monday that company LetterOne, owned by Russian billionaire Mikhail Fridman, had a maximum of six months to change the ownership of North Sea gas fields currently in its possession.

In March, Fridman's investment vehicle acquired the fields as part of a $5.4 billion takeover of DEA, the former oil and gas unit of Germany's RWE utility. He plans to build a major player in the oil and gas business.

"The Secretary of State Ed Davey proposes to revoke DEA UK's North Sea petroleum licenses unless LetterOne arranges for a further change of control of the DEA UK gas fields in the North Sea," the ministry said in a statement.

On Monday, the Russian-owned company was not immediately available for comment.

The British government first announced its objections to LetterOne's ownership of North Sea assets a few weeks ago, saying it was concerned energy production from the fields could be interrupted if sanctions against Russia were extended.

Political pickle

Fridman's acquisition has come at a particularly fickle time for the British Prime Minister David Cameron, who is up for re-election in May.

Cameron has been one of the EU's most vocal critics of Russian President Vladimir Putin's involvement in the Ukraine crisis, and has been a particularly hawkish proponent of tough sanctions against the Kremlin.

Allowing a Russian tycoon to take over control of UK energy assets when relations with Moscow have plunged to their lowest since the Cold War could prove costly for Cameron and his Conservative Party.

At the same time, however, the government fears that the North Sea fields, which account for 3 to 5 percent of UK gas production, could be shut down if the sanctions against Russia were to be tightened even further. Forcing Fridman to sell could be one of Cameron's last face-saving solutions.

Wooing Downing Street

The Ukraine-born billionaire, who made a fortune in Russia after the collapse of the Soviet Union, has assured Downing Street that his LetterOne Group is eager to negotiate a deal that would allow it to keep its assets.

"We are keen to work with the government and will leave no stone unturned to find a solution in the interest of everyone concerned," the consortium said in March.

One such step has been to group the disputed assets in a Dutch foundation, which Fridman argues would insulate them from potential sanctions against Moscow.

The billionaire has also tried to woo Britain's political establishment, announcing former BP CEO John Browne, a member of the House of Lords, as the head of its energy division.

But London has rejected such attempts to allay its worries, pointing to several firms and people linked to the Russian energy industry that have also been targeted by international penalties.

Lawsuits as leverage

Fridman also threatened to go to court if Britain tries to stop the deal. In a letter to British authorities, the LetterOne CEO warned the company would seek compensation and threatened to shut down production if Britain takes action - "the very consequences (Britain) is trying to guard against."

The DEA sale is a key element in the Kremlin ally's plans to create a new international oil company. It required the approval of 14 countries where DEA operates. Germany gave its approval in August.

uhe/sri (Reuters, UK government)