The group intends to "close or sell" up to 11 of the unit's 23 sites around the world, according to Manager Magazin, citing sources at the company.
"That would entail cutting thousands of jobs, including in Germany," the monthly magazine wrote.
Some 30,000 workers are currently employed in the division, 12,000 of them in Germany, it added.
The restructuring comes as Siemens, whose products range from wind turbines to trains to medical equipment, grapples with falling demand for gas-fired power plants as countries switch to renewable energy.
In August, Siemens reported a 40-percent plunge in new orders at its power and gas unit in the third quarter of its fiscal year.
It also complained of "volatility" in orders for offshore wind turbines.
Siemens was not immediately available for comment when contacted by AFP.
But a spokesman told Manager Magazin that the group was continually considering its strategic direction and that this could include "consolidating certain activities".
Siemens plans to present the overhaul to employees in "early November", according to the magazine.
Jobs in eastern Germany are particularly at risk, it added, with management reportedly considering selling a generator plant in Erfurt and shutting down a turbine factory in Goerlitz.
The last shake-up of Siemens' troubled power and gas business in 2015 led to 1,100 job cuts in Germany, as part of a wider overhaul that saw the group slash 13,100 jobs worldwide.