(Adds RWE comment)
LONDON, Feb 28 (Reuters) - Britain has blocked a deal byRussian billionaires, Mikhail Fridman and German Khan, to buy 12oil and gas fields in the North Sea as part of their acquisitionof Germany's oil firm DEA from RWE, citing possiblesanctions against Russia.
"If the proposed acquisition were to proceed in its currentform, he (Energy Secretary Ed Davey) would be minded to requirethe companies to arrange for a further sale to a suitable thirdparty," the Department of Energy said in a statement onSaturday.
The decision is a blow to the oligarchs, who have sold alarge chunk of their oil assets in Russia and want to turn theirLetterOne fund into a top global energy player.
Fridman and Khan, who were not viewed as being close to theKremlin, have hired John Browne, a former CEO of British oilmajor BP, to help them expand abroad and soothe anyconcerns that the British government may have had over theirpolitical links.
U.S. and European diplomats have said that by imposingsanctions on Russian state controlled companies and the innercircle of President Vladimir Putin they hope to persuade Russiato change its course in Ukraine.
But sanctions have so far failed to persuade Putin to helpstop the violence in Ukraine. Russian businesses, even thoseunconnected to the Kremlin, have struggled to raise debt andoperate abroad.
The decision by Britain to block the deal is the first ofits kind as it not based on current sanctions, but on concernsany future sanctions may impact Fridman and Khan, among others.
Fridman and Khan's LetterOne fund is buying Dea from RWE for 5 billion euros ($5.60 billion) in a deal expectedto close next week. Dea operates in several countries includingBritain, where it has stakes in 12 producing oil and gas fields.
An RWE spokeswoman on Saturday said the company was stickingto a statement it had made on Jan. 16 that the sale should becompleted in early March. The statement also said that ifsanctions were imposed, RWE would have to re-purchase the UKbusiness and sell it on to another buyer.
LetterOne was seeking a letter of comfort from the Britishgovernment that it would not seize the fields if sanctions wereimposed on Russian businessmen.
Davey said in a statement he was concerned about the effect"that possible future sanctions imposed on LetterOne may have onthe continued operation of the fields and the serious health andsafety and environmental risks that may result".
The companies had proposed to operate the British fieldsthrough a separate unit if sanctions were imposed.
"After careful consideration the Secretary of State hasdecided that the proposal does not adequately and surelyalleviate those concerns," the statement said.($1 = 0.8933 euros) (Reporting by Dmitry Zhdannikov, additional reporting byJonathan Gould and Matthias Inverardi, editing by LouiseHeavens)