* E.ON is biggest foreign investor in Russia's power sector
* Russia is E.ON's biggest gas supplier
* E.ON has no plans to exit Russia - source
By Christoph Steitz
FRANKFURT, March 21 The Russian interests of E.ON, Germany's biggest energy group, are unlikely to be damaged by economic and trade sanctions against Russia because there is too much at stake on both sides, analysts and shareholders said on Friday.
With the East-West confrontation over Crimea showing no signs of abating, the European Commission has been tasked to prepare for more possible sanctions that could impact the energy sector.
But Russian individuals targeted with personal sanctions such as asset freezes and travel bans are unlikely to include the chiefs of big Russian energy companies, Austrian Foreign Minister Sebastian Kurz said earlier this week.
Diplomats also dismissed a German newspaper report last week that said that Alexei Miller, head of gas monopoly Gazprom , and Igor Sechin, head of Rosneft and a close ally of President Vladimir Putin, would be among those targeted.
Germany, Europe's biggest gas market, is heavily reliant on supplies from Russia, which accounted for about 39 percent of German natural gas imports last year, while E.ON itself gets 30-40 percent of its gas needs from Gazprom.
"Russia needs the money it gets for its gas. In turn, Germany, and E.ON, need gas from Russia," said Heino Hammann, analyst at Germany's NordLB, adding he did not believe the energy sector would be the target of future sanctions.
In addition E.ON is the biggest foreign investor in Russia's electricity market, having spent about 6 billion euros ($8 billion) since 2007 alone and owning 9.6 gigawatts (GW) of electrical power generating capacity in the country, more than 4 percent of its total.
"E.ON supplies regions that are key to industries, such as oil and gas, engineering, metal production and agricultural chemicals, fulfilling a crucial function in the eyes of the Russian leadership," said Thomas Deser, senior portfolio manager at Union Investment, E.ON's eighth-biggest shareholder.
"The company insists that the ties have remained strong in the past, even through difficult times. That's the main point which is convincing investors," said Torsten Graf, fund manager at MainFirst and holder of E.ON shares.
A person familiar with the matter told Reuters E.ON was not planning to pull out of Russia or change its business there in any way, and most of E.ON's 5,000 employees in Russia are locals.
E.ON declined to comment on Friday, referring to statements made by Chief Executive Johannes Teyssen last week, when he said he did not see any risk of expropriation in Russia.
The Russian market accounted for 1.5 percent of E.ON's sales and 7.4 percent of the group's earnings before interest, tax, depreciation and amortisation (EBITDA) last year.
E.ON supplies power through local plants operated by E.ON Rossiya OAO, in which it holds more than 80 percent, but ties with the country run much deeper in other areas.
Along with Germany's BASF and Gazprom, E.ON is also a partner in Yuzhno Russkoye in Siberia, one of the world's largest gas fields, which feeds into the Nord Stream pipeline which runs under the Baltic Sea into Germany.
Nord Stream, in which E.ON holds a 15.5 percent stake, has been in operation since 2011 and was specifically built to bypass Ukraine.
A much bigger risk from the current political crisis for E.ON comes from the weakening rouble, which has no impact on the company's dollar-denominated gas contracts with Gazprom but hits the value of its power generation business in Russia.
Currency factors reduced E.ON Russia's earnings before interest, tax, depreciation and amortisation by 6 percent to 687 million euros last year, and the group said profits would again fall "significantly" this year for the same reasons. ($1=0.7255 euros) (Additional reporting by Vera Eckert in Frankfurt and Vladimir Soldatkin in Moscow; Editing by Greg Mahlich)