L1 Energy: Russian Oligarchs Fridman & Khan and the Global Energy Market

Very interesting article about the return of famous Russian oligarchs Mikhail Fridman and German Khan to the global energy market, courtesy of DealBook: http://dealbook.nytimes.com/2013/06/28/oligarchs-assemble-team-for-oil-deals/?_r=0

The article ties together the recent news about the two businessmen's joint L1 Energy fund, in which they plan to invest as much as $10 billion and then leverage into $20 billion using borrowed funds. Much of the initial investment will come from the famous Alfa Group, co-founded and co-owned by Fridman, Khan, and  Alexei Kuzmechov and one of the largest privately owned ventures in Russia. Fridman and Khan have also been recruiting some of the top industry talent for their new venture, including James T. Hackett, former head of Anadarko Petroleum, and, very interestingly, John Browne, former chief of BP.

Fridman, left, and Khan, right, are assembling a massive fund for energy investing

Some readers may recall that Fridman and Khan's relationship with BP in the past has been anything but amiable. Formerly business partners of the British oil and energy giant in Russia, a conflict over the management of the Russian partnership led the Russians to demand the resignation of the British executive of TNK-BP, Robert W. Dudley. After the Russian partners moved to pressure Dudley by having his visa revoked, he left Russia and even went into hiding for a time. Then in 2011, when Dudley--as CEO of BP--concluded an Arctic oil deal with Rosneft (a rival to TNK in the Russian energy market), Fridman and Khan blocked the deal using legal action. The deal eventually went through, but not before the BP office in Moscow was raided by armed police.

In the wake of the recently troubled relationship between BP and the Russian oligarchs, the addition of Browne to the L1 Energy team adds a certain amount of credibility to the platform for Western investors, at least at face value, and is a very shrewd business move by Fridman and Khan in order to reassure doubters about the legitimacy and openness of their operations. It will be interesting to watch the growth and development of the L1 Energy group in the near future, as it moves to develop long-term controlling stakes in "exploration and production, oilfield services, infrastructure and other energy projects."

John Browne, formerly of BP