Russia's Gazprom, the world's largest gas company, is set for a rare victory in the quest to expand its foothold in western Europe.

Shareholders in eastern German gas supplier VNG, which has been importing Russian gas for more than 40 years, are set to agree to GDF Suez selling its 5 percent VNG stake to Gazprom and have indicated they would allow the Russian company to buy more shares.

For years, Gazprom has been keen to sell more gas directly to lucrative western European customers but has had difficulty with expansion.

It was eyeing British utility Centrica in 2006 but the interest was met with the threat of robust scrutiny from the British government and stopped right there.

In 2003, Gazprom considered making a bid for E.ON, the world's largest utility, according to a person at E.ON who declined to be identified.

Two VNG shareholders -- 48 percent stakeholder EWE and 26 percent shareholder VUB -- told Reuters they would not oppose Gazprom expanding its VNG stake, which is a much more welcoming stance than the utility has encountered in the past.

BASF's Wintershall unit, which holds 16 percent of VNG -- Germany's third-largest gas importer -- said it was sympathetic toward Gazprom expanding its stake. VNG is eastern Germany's largest gas importer and generated net income of 140 million euros ($209 million) in 2008 on sales of 5.5 billion euros.

Gazprom buying GDF Suez's VNG stake would be a logical deal, said a manager at one of the shareholders, who declined to be identified. The stake is worth between 150 million euros and 200 million euros, according to a person in the finance industry.

The deal might also help GDF Suez in turn to buy a stake in the planned Nord Stream pipeline that will ship Russian gas through the Baltic Sea to Germany.

More stakes in VNG are set to come up for sale. The company's largest shareholder, northern German utility EWE EWE.UL, is planning to sell its 48 percent stake in VNG to Energie Baden-Wuerttemberg (EBKG.DE), Germany's third-largest utility.

However, EWE needs approval from other shareholders for the transaction, and at least shareholder VUB -- comprising 10 eastern German communities -- said it would only agree to the transaction if EWE cut its stake to at least 30 percent.

A stake of maybe 30 percent is acceptable, said Andreas Reinhard from the municipal utility of Erfurt, one of the communities in VUB.

EWE Chairman Guenther Boekhoff said that EWE would not oppose another VNG shareholder -- including Gazprom -- buying any part of its VNG stake that might come up for sale.

Solidifying its sales position in Europe, Gazprom's main market outside Russia, is a key part of the company's strategy to sell more gas directly to customers and not share profits with other distributors.

Gazprom's German unit, which sells gas on Europe's second-largest gas market as well as in countries ranging from Turkey to Britain, generated some 14 billion euros in sales in 2008.

That is less than a third of Gazprom's overall revenues outside Russia in 2008 of $66.4 billion.

Gazprom is also seeking to expand its foreign market share by building a gas-fired power plant in eastern Germany and seeks to lay two pipelines to ship Russian gas to western Europe -- Nord Stream and South Stream, which will cross southern Europe.

($1=.6699 Euro)

(Editing by Karen Foster)

Germany Russia Energy E.on