E.ON Reportedly Seeking to Sell German Gas Network

E.ON AG reportedly plans to sell its Open Grid Europe unit that runs Germany's largest gas transmission pipeline network stretching over some 12,000 kilometers.

The move would be part of the company’s plans to overhaul of its business due to financial pressures stemming in part from Germany's decision to abandon nuclear power.

In an advisory to clients, UniCredit analysts wrote that “Gazprom would be an obvious candidate [to buy the asset], as the company has been keen to expand its presence in European midstream assets.”

Last year, Germany's RWE sold its 4,100-km German gas grid Thyssengas to investment bank Macquarie for about 500 million euros.

E.ON's Ruhrgas unit recently opened arbitration proceedings Gazprom over long-term gas supply deals that have seen the German utility incur financial losses.

Long-term gas supply contracts between producers such as Gazprom and its European customers are linked to the price of oil, but that pricing formula has attracted increasing criticism since crude peaked at over $140 a barrel in 2008.