Qatar has held initial talks with Germany's No.2 utility RWE AG about buying its DEA oil and gas exploration and production unit, two people familiar with the deal have told Reuters.
However the talks are some way from bearing fruit. "The project has been moving very slow and no decision should be expected anytime soon," one of the people said on Friday.
RWE had said in March it was planning to sell DEA in a move to slash capital spending and cut its multi-billion euro debts, with one of the people saying the company aimed to raise about 5 billion euros ($6.5bn) from the sale.
The Wall Street Journal reported late on Thursday that RWE has held talks on DEA with the Qatar Investment Authority (QIA). RWE declined comment while the QIA was not available for comment.
So far, BASF SE's oil and gas arm Wintershall has been the only company to publicly confirm interest in DEA, which employs nearly 1,400 and accounted for 23 percent of RWE's operating profit in 2012.
The sources said Qatar and RWE had held regular talks for some years on a number of topics, including DEA, but did not elaborate.
RWE said it wants to sell the unit as a whole, but that could be quite difficult due to the complex structure of DEA, which holds stakes in about 190 oil and gas licenses or concessions in 14 countries in Europe and the Middle East.
Analysts have pointed out it could be difficult for RWE to sell off the whole unit at an acceptable price, citing instability in some of the regions where DEA has assets, including Egypt.
Sources told Reuters in March that Goldman Sachs had been hired to manage the sale.
RWE, under pressure from Germany's decision to exit nuclear power and squeezed by low wholesale prices in Europe, as well as its 33 billion euro debts, is trying to rid itself of assets which swallow large investments.
The company invested 700 million euros in 2011 and in 2012, a number expected to rise to about 900 million this year.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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