Germany Could Stop RWE-DEA sale to Russia Tycoon

Germany's Economy Ministry is investigating whether to block the sale of RWE's oil and gas unit DEA to a group of investors led by Russian tycoon Mikhail Fridman, according to a ministry spokesperson.

A clause in Germany's foreign trade law, would allow the ministry to stop the deal, announced earlier this year, if there were concrete signs it threatened "public safety and order." However, this clause has never been invoked.

"An investigation has been started. It is an open-ended investigation (to find out) whether there are conditions for prohibiting the deal under the foreign trade accord," a spokeswoman for the economics ministry told the news agency Reuters, confirming a report in Der Spiegel magazine.

The magazine reported that the ministry had started to look into the deal following fresh information but did not give further details.

The €5.1 billion deal was criticized by senior German politicians in March, as relations between Russia and the West deteriorated over Ukraine.

The sale will hand Fridman, Russia's second-richest man, and other co-investors stakes in about 190 oil and gas licenses or concessions in Europe, the Middle East and North Africa.

Germany currently receives more than a third of its gas and oil from Russia. More than 6,000 German companies are active in the country and business associations and trade bodies have warned that an escalation in tensions over Ukraine would result in catastrophic losses for firms.

RWE, like other German utilities, is struggling to adjust to a power sector shake-up as Germany moves away from nuclear energy. The shake-up has more than halved the debt-burdened firm's market value in four years.

Under pressure from a deep and prolonged industry crisis, caused by a surge in rivals' renewable capacity as well as weak energy demand in its core market Europe, RWE has been looking for ways to reduce its debt pile of more than €30 billion, including cutting jobs and shedding assets.