Germany's economy ministry will approve the sale of utility RWE's (RWEG.DE) oil and gas unit DEA to a Russian investor despite tensions between Russia and the West over theUkraine crisis, two people familiar with the matter said.
The economy ministry said in June it was investigating whether to block the 5.1 billion euro ($6.9 billion) sale of the DEA unit to the Letter One group of investors led by Russian tycoon Mikhail Fridman, which was announced in March.
Representatives of the ministry, RWE and the Letter One consortium declined to comment.
Europe and the United States have imposed economic sanctions against Russia for its annexation of Ukraine's Crimea region and its backing of pro-Russian separatists, who are fighting against government forces in eastern Ukraine. Russia, in turn, has slapped bans on Western food imports.
As part of the deal, Fridman, Russia's second-richest man, and his co-investors get stakes in about 190 oil and gas licenses or concessions in Europe, the Middle East and North Africa.
The German government could theoretically have used a clause in its foreign trade law that allows it to block takeover deals that threaten "public safety and order", but it would have been an unprecedented move.
RWE has previously said it expects the deal, which has already got antitrust approval from the European Union, to be finalised this year.
The transaction came under criticism from senior German politicians in March as relations between Russia and the West deteriorated over Ukraine.
Germany currently receives more than a third of its gas and oil from Russia.
RWE, like other German utilities, is struggling to adjust to a power sector shake-up as Germany moves away from nuclear energy and encourages a shift to more renewables, while Europe's energy demand is weak.
The shake-up has more than halved the debt-burdened firm's market value in four years.
RWE has been looking for ways to reduce its debt of more than 30 billion euros, including cutting jobs and shedding assets.
