Ownership row may threaten output at large British gas field-partner

LONDON, April 23 (Reuters) - Gas production at one of Britain's biggest new North Sea fields may be under threat after its minority owner Sterling Resources (Other OTC: SGURF - news) said it would not invest in increasing output without clarity over the asset's ownership.

The Breagh gas field in the southern North Sea is operated and 70 percent owned by DEA, the former oil and gas unit of Germany's RWE (Xetra: 703712 - news) which was sold to the LetterOne investment vehicle owned by Russian tycoon Mikhail Fridman last month.

However, earlier this week the British government ordered the sale of DEA's British assets, arguing it was concerned a potential new round of Russian sanctions could jeopardise the operations of the fields.

LetterOne now has up to six months to find a new owner for its British fields, including Breagh, which is 30 percent owned by Canada's Sterling Resources.

"Sterling believes that the continuing lack of clarity on the future ownership of the Breagh field is not conducive to the efficient management of the field, and may defer ongoing development work and reduce future production levels from the field," a spokesman told Reuters.

LetterOne declined to comment.

Breagh produces roughly 3 percent of Britain's annual gas output, making it an important contributor to energy security.

The partners were planning on drilling three more wells in the fourth quarter of this year and had raised the possibility of further drills beyond this programme.

These investments are now under threat, Sterling said, as such decisions are typically made by the field operator, in this case LetterOne, in consultation with its project partners. (Reporting by Karolin Schaps, editing by William Hardy)