Top Chinese fertilizer company Sinofert (0297.HK: Quote, Profile, Research, Stock Buzz) — in which Potash (POT.N: Quote, Profile, Research, Stock Buzz) owns a 22 percent stake — is the most logical candidate to lead a counter offer, industry sources say.

While Sinofert itself is small — its $3.8 billion market value is less than a 10th of Potash’s — its parent, Sinochem Group, is a huge state-owned group. Sinochem, the country’s biggest chemical trader and top fertilizer firm, had revenues of $36 billion last year.

Aluminum giant Chalco (2600.HK: Quote, Profile, Research, Stock Buzz) (601600.SS: Quote, Profile, Research, Stock Buzz), and state-backed chemicals company ChemChina, could also emerge as potential bidders, according to the sources.

“I assure you there are numerous organizations in China who would chase potash (assets),” said an Asia-based investment banker who has advised Chinese resources companies on overseas deals.

“China has very few potash reserves for itself, it’s a commodity which they’re going to be in short supply of. And, does China want to be over the barrel on yet another commodity?”

A spokeswoman for Sinofert declined to comment, while Chalco and ChemChina could not be reached for comment.

Even for cash-rich Chinese companies, the price-tag remains the biggest obstacle, with few companies able to match BHP’s all cash offer at $130 per share.

A Chinese suitor — if one emerges — is more likely to link up with a sponsor such as the country’s $300 billion sovereign wealth fund China Investment Corp.

“Now, you could maybe cobble together a consortium that would comprise a Chinese player with a Chinese financial investor, but again, those things are difficult to knit together at the best of times,” said another banking source.

Both bankers were unauthorized to speak publicly about the matter and declined to be named.

A RIO MODEL?

Two years ago, at the height of BHP’s hostile takeover attempt for Rio Tinto (RIO.AX: Quote, Profile, Research, Stock Buzz) (RIO.L: Quote, Profile, Research, Stock Buzz), China’s state-back Chinalco bought a 9 percent stake in Rio, a purchase meant to help block the deal.

While Chinalco saw $10 billion quickly wiped from its investment, BHP did ultimately abandon the deal, much to the happiness of Beijing, which was worried about the pricing clout a combined BHP-Rio would have over a host of commodities needed to fuel China’s economic growth.

While Potash might not have the same broad and strategic importance as a diversified miner such as Rio, the mineral is a crucial ingredient in producing better crop yields. That’s of vital importance to China and its 1.3 billion people as its growing middle class increases the rate of food consumption.

A decreasing amount of arable land worldwide adds even more upside to the long-term outlook for potash, and the desirability of potash assets.

Rio and Brazil’s Vale (VALE.N: Quote, Profile, Research, Stock Buzz) have also been mentioned as potential rival bidders for Potash. The notion of BHP reaching out to a foreign buyer is also being discussed among bankers.

“One scenario is for BHP to have a pre-sale agreement and partner up with a Chinese firm for any part of the Potash operations it doesn’t like,” said another banker.

PRICING POWER

Also at issue for China in the Potash takeover saga is the testy matter of annual potash price negotiations.

Potash prices are typically negotiated by three major companies: the Belarussian Potash Company (BPC), the marketing arm of producers Belaruskali and Russia’s Uralkali (URKA.MM: Quote, Profile, Research, Stock Buzz); Canpotex, a joint arrangement between Potash Corp, Agrium Inc (AGU.TO: Quote, Profile, Research, Stock Buzz) and Mosaic Co (MOS.N: Quote, Profile, Research, Stock Buzz); and PhosChem, which also acts on behalf of Potash Corp and Mosaic.

Some agricultural experts say BHP’s potential ownership of Potash will not have a major impact on the potash pricing regime, given that BPC has set the tone for prices with major buyers in China and India at prices below the ones that Canadian producers want to see in recent years.

Still, BHP — which strongly advocated a dismantling of the annual iron ore pricing benchmark — is a critic of annualized commodity contracts.

The world’s largest miner could easily use its considerable weight to fight for a more market-based potash pricing system, frustrating Chinese demands for lower prices.

“Someone like BHP coming in would be a bit more of a maverick in terms of bringing the industry forward like they did with iron ore pricing — not them alone, it had to be everyone else — but they were certainly championing a new system,” said James Wilson, an analyst at DJ Carmichael.

“It wouldn’t be surprising if they did a similar thing with potash as well.”

(Additional reporting by Denny Thomas in HONG KONG; Editing by Michael Flaherty and Lincoln Feast)

Barely 24 hours after its $130 per share was made public, the world’s largest miner said on Wednesday it would make the offer direct to shareholders in an effort to circumvent a shareholder rights plan rolled out by Potash Corp’s board on Tuesday..

That rights plan could have given existing shareholders a chance to buy more stock at a steep discount if a single investor bought a 20 percent stake in the company, making it more difficult and expensive for BHP to snap up a controlling stake in Potash Corp.

“Clearly Potash Corp felt that wasn’t in their best interest,” Marius Kloppers, BHP’s CEO said, referring to the initial offer.

“I stress that our intention here was to try and get to a cooperative arrangement by scheme of arrangement.”

There is one legal factor working in Kloppers’s favor.

Canadian securities law prevents Potash Corp from triggering the rights plan if BHP takes its offer to all shareholders and leaves it on the table for a minimum of 90 days, which going hostile achieved.

BHP is seeking a minimum 50 percent acceptances by its Oct 19 deadline.

For its part, Potash Corp is testing the waters to prove that it is worth more than BHP’s bid, which it called “grossly inadequate.”

“(Potash is thinking) let’s see what rival bidders we can get to get the price up, and let’s see what we can do to get BHP’s offer up independently,” one of three banking sources told Reuters.

FEW RIVAL SUITORS

Even with time on its side, Potash Corp will struggle to find a viable alternative to BHP’s bid, given the huge size of any potential deal, two Asia-based mining and metals bankers told Reuters.

BHP rivals such as Brazil’s Vale will find it difficult to match the firepower of BHP’s estimated $11 billion cash pile.

Still, that doesn’t mean rivals won’t try, given the fundamentals of the global fertilizer industry. Rising food consumption standards in China and India, and a finite amount of arable land, are seen as factors which will give a long term boost to potash — a crucial ingredient in many fertilizers.

“Now that this is in play, everyone that has run a file on Potash Corp … will take the file off the shelf, dust it off, update it, and take a look at what may be achievable,” said one of the Asia-based resources bankers.

“Vale will certainly look at it — they’ve made a number of acquisitions in the fertilizer space — so they will definitely take a look.”

Two bankers said state-owned Chinese firms (SOEs) such as Sinofert did not like to compete with the “big boys” on major bids and were highly unlikely to get involved.

“The fact is the (Chinese) SOEs are pretty risk averse, so anything that they might do in this situation would need to be very carefully considered, and calibrated with that fundamental risk aversion in mind.”

All three bankers who spoke to Reuters were unauthorized to speak publicly about the matter and declined to be identified.

There is almost zero chance BHP’s rival Rio Tinto would enter the fray, some fund managers say.

Rio has only recently sold off potash assets in Argentina and Canada. What’s more, it is committed to spend $13 billion on various projects in the next 18 months, which would hamper its ability to compete effectively in a bidding war.

“It would be very surprising to see them (Rio) be a competitor to BHP in trying to buy an existing potash interest,” said Tim Schroeders, a portfolio manager at Pengana Capital, which owns BHP and Rio Tinto shares.

“They’ve got more on their plate and can probably spend their money better elsewhere.”

(Additional reporting by Sonali Paul in Melbourne; Editing by Lincoln Feast)

U.S. oil giant Chevron Corp (CVX.N: Quote, Profile, Research, Stock Buzz) has put portions of its
stakes in the Ganal-Rapak sea gas project near East Kalimantan
on the block, in what could be an $800 million deal.

There’s also talk that ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz), the
third-largest U.S. oil company by market value, is gearing up
to divest parts of its Indonesian businesses, three bankers
with knowledge of the matter said.

All three bankers were unauthorised to speak publicly about
the matter and declined to be named.

Chevron owns 80 pct of the Ganal-Rapak project, and Italy’s
ENI SpA (ENI.MI: Quote, Profile, Research, Stock Buzz) owns 20 pct. The second-largest U.S. oil
company aims to reduce its holding to roughly 51 percent, said
one of the sources.

The sale process has gained significant momentum since last
November when Chevron first said it was seeking partners in the
project, which is expected to come on line in 2016. There is no
clear time table for the completion of the auction.

“It’s probably five to six years from production, and it
will probably need some capital expenditure so it’s not
everyone’s cup of tea,” an Asia-based investment banker with
direct knowledge of the auction said.

“Chevron’s got a lot of capex commitments in Australia –
they’re trying to get some money and selling some non-core
assets, or reducing their exposure or stakes in these assets.
The process is up and running and everyone is running around
and looking for horses to back.”

Indonesia’s state-owned oil and gas firm PT Pertamina has
said it is interested in taking a stake of at least 10 percent
in the Ganal-Rapak sea gas project.

“If we get the official offer to bid, we will look into it
seriously,” said Mohamad Afdal Bahaudin, Pertamina’s finance
director.

Japanese companies Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) and Mitsui & Co
Ltd (8031.T: Quote, Profile, Research, Stock Buzz) — who often prefer minority stakes to total
takeovers — as well as PT Pertamina are all likely to bid,
one
of the banking sources said.

A Chevron spokesman in Indonesia told Reuters that the
company “is evaluating partner opportunities for the Indonesia
Deepwater Development Project”.

“The process is ongoing and subject to approvals by the
government of Indonesia. Therefore, we are not disclosing
details related to the process at this stage.”

LONG TIME COMING

Indonesia, a nation of more than 17,000 islands — endowed
with quality coal, oil, gas, and mineral deposits and neighbour
to the world’s neediest resources consumer, China — is fast
growing in stature as a destination for outbound deals and
foreign capital.

Earlier this month, Indonesia’s State Enterprises Minister
Mustafa Abubakar said China Investment Corp (CIC) — China’s
$300 billion sovereign wealth fund — may invest as much as $25
billion in Indonesia over the long term. [ID:nJAK118383]

Chatter also persists that Chevron competitor
ConocoPhillips is gearing up to divest parts of its Indonesian
businesses, the three banking sources said.

The rumours have been circulating for a long time, and
Conoco has denied such speculation in the past, one banker told
Reuters. Conoco declined to comment on the matter when
contacted by Reuters in Jakarta.

Conoco is in the middle of an asset-selling campaign which
Deutsche Bank estimates could raise a total of $15 billion as
it seeks to reduce debt. [ID:nSGE6660E]

It operates seven production-sharing contracts for oil and
gas in Indonesia, producing a total of 93 million barrels of
oil equivalent per day (MBOED), according to its website.

Local energy players such as PT Medco Energi Internasional
Tbk (MEDC.JK: Quote, Profile, Research, Stock Buzz) have heard the sale may proceed and are
expressing interest, a Jakarta-based corporate source told
Reuters.

Any deal for either Chevron or Conoco would elevate
Indonesia even higher as an Asian destination for high-profile,
cross-border resources deals.

Last year, BP Plc (BP.L: Quote, Profile, Research, Stock Buzz) sold its stake in an offshore oil
and gas block in West Java to Pertamina, claiming it no longer
fitted with the company’s long-term strategy.

“It’s a logical move for them (Chevron) to get quick money
and ease their financing burden a little but it has been in the
air for as long as I can remember and I’ll believe it when they
sign something,” said Kurtubi, an independent Jakarta-based
energy analyst, and former employee of Pertamina.

He also thought the Japanese would show strong interest in
the asset given a tendency to pefer minority stakes and a need
to secure resources.

“The Japanese are the most likely buyers for this as this
type of deal suits their business style, guaranteeing the gas
supply,” Kurtubi added.
(Additional Reporting by Muklis Ali in JAKARTA; Editing by
Chris Lewis and Dhara Ranasinghe)

BP has hired advisers to sell its stakes in oil fields and
gas projects in Colombia and Vietnam, according to separate
sources familiar with the matter on Thursday.

And Russia’s TNK-BP (TNBPI.RTS: Quote, Profile, Research), in which BP has a half
stake, said it was considering buying BP’s Venezuelan interests,
which analysts value at $850 million to $1 billion.
[ID:nWLA9690]

BP has hired Barclays Capital (BARC.L: Quote, Profile, Research) to sell its Colombian
assets, according to two people familiar with the matter.
Analysts value that business, based around the Cusiana and
Cupiagua fields, at $1.5 to $2 billion.

BP discovered the Colombian fields in the early 1990s. Their
production peaked in 1999, at an average rate of 434,000 barrels
per day (bpd).

BP handed over the operation of the Cupiagua field this
month to state oil company Ecopetrol SA but still operates
Cusiana. Cupiagua output was then running at 26,000 bpd.

VENEZUELA

In Moscow, a TNK-BP spokesman told Reuters it was “actively
evaluating the opportunity to participate in the assets,” and
said a deal “would be beneficial for both companies and would
foster further development of Venezuela’s oil sector”.

TNK already invests in a Russian National Oil Consortium
joint venture with Venezuela’s state-owned PDVSA, he added.

In Venezuela, BP has minority stakes in two exploration and
production joint ventures with PDVSA. It is also a partner in
the Petromonagas crude upgrader that produces 110,000 bpd, with
gross reserves of 1.2 billion barrels of oil equivalent.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphic on BP’s potential disposals

here

Factbox on potential asset sales [ID:nLDE66Q0Q2]

Story on BP oil spill [ID:nLDE66S1AJ]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

GAS PROJECT

Three other people familiar with the situation said the
British oil giant recently tapped HSBC (0005.HK: Quote, Profile, Research)(HSBA.L: Quote, Profile, Research) to sell
its stake in the Nam Con Son gas project in Vietnam.

BP said last week it was seeking a buyer for its stake in
the Nam Con Son gas project offshore southern Ho Chi Minh City,
worth $966 million in one estimate.

India’s state-run explorer Oil and Natural Gas Corp
(ONGC.BO: Quote, Profile, Research) and PetroVietnam — both partners with BP in the Nam
Con Son project — are expected to submit a joint formal offer
within weeks to buy BP’s stake [ID:nTOE66S08S].

BP declined to comment. A Barclays spokesman was not
immediately available to comment. A Hong Kong spokeswoman for
HSBC declined to comment.
(Additional reporting by Tom Bergin in London and Katya
Golubkova in Moscow; editing by Karen Foster)

The planned sales also aim to create a leaner company with the potential for higher growth. Last week, the oil major agreed a $7 billion sale of oil and gas fields to Apache Corp(APA.N: Quote, Profile, Research), in its first major sell-off.

BP has hired advisers to sell its stakes in oil fields and gas projects in Colombia and Vietnam, according to separate sources familiar with the matter on Thursday.

And Russia’s TNK-BP(TNBPI.RTS: Quote, Profile, Research), in which BP has a half stake, said it was considering buying BP’s Venezuelan interests, which analysts value at $850 million to $1 billion.

BP has hired Barclays Capital to sell its Colombian assets, according to two people familiar with the matter. Analysts value that business, based around the Cusiana and Cupiagua fields, at $1.5 to $2 billion.

BP discovered the Colombian fields in the early 1990s. Their production peaked in 1999, at an average rate of 434,000 barrels per day (bpd).

BP handed over the operation of the Cupiagua field this month to state oil company Ecopetrol SA but still operates Cusiana. Cupiagua output was then running at 26,000 bpd.

VENEZUELA

In Moscow, a TNK-BP spokesman told Reuters it was “actively evaluating the opportunity to participate in the assets,” and said a deal “would be beneficial for both companies and would foster further development of Venezuela’s oil sector”.

TNK already invests in a Russian National Oil Consortium joint venture with Venezuela’s state-owned PDVSA, he added.

In Venezuela, BP has minority stakes in two exploration and production joint ventures with PDVSA. It is also a partner in the Petromonagas crude upgrader that produces 110,000 bpd, with gross reserves of 1.2 billion barrels of oil equivalent.

Graphic on BP’s potential disposals, click here

GAS PROJECT

Three other people familiar with the situation said the British oil giant recently tapped HSBC to sell its stake in the Nam Con Son gas project in Vietnam.

BP said last week it was seeking a buyer for its stake in the Nam Con Son gas project offshore southern Ho Chi Minh City, worth $966 million in one estimate.

India’s state-run explorer Oil and Natural Gas Corp and PetroVietnam — both partners with BP in the Nam Con Son project — are expected to submit a joint formal offer within weeks to buy BP’s stake.

BP declined to comment. A Barclays spokesman was not immediately available to comment. A Hong Kong spokeswoman for HSBC declined to comment.

(Additional reporting by Tom Bergin in London and Katya Golubkova in Moscow; editing by Karen Foster)

(For more business news on Reuters India click in.reuters.com)

The British oil giant, which is on a campaign to sell a host of assets from Pakistan to Egypt, said last week it is seeking a buyer for its stake in the Nam Con Son gas project offshore southern Ho Chi Minh City, worth $966 million by one estimate.

India’s state-run explorer Oil and Natural Gas Corp and Petrovietnam — both partners with BP in the Nam Con Son project — are expected to submit a joint formal offer within weeks to buy BP’s stake.

“The formal auction should get underway in two weeks,” an Asia-based resources banker who has advised oil giants on outbound deals told Reuters.

He added that a pre-emptive bid by ONGC and Petrovietnam will be tough to beat, given BP’s desperation, and Hanoi’s insistence that BP’s partners be given first priority.

ONGC has a 45 percent share in Block 6.1 in the Nam Con Son basin, operated by BP, which has a 35 percent stake. The remaining 20 percent is owned by state-run Petrovietnam.

BP’s stake includes interest in the Lan Tay and Lan Do gas fields, the Nam Con Son pipeline and the Phu My power generation project.

Any bids from Chinese oil firms such as Sinopec will face a difficult battle given tense territorial disputes in the South China Sea, some bankers say.

The stake is also likely to draw interest from Thailand’s PTTEP, and Malaysia’s Petronas, among other Asian bidders, one of the sources said.

The sources were not authorized to speak publicly about the matter and declined to be named. A Hong Kong-based spokeswoman for HSBC declined to comment.

BP’s planned asset sales are aimed at helping it pay for its liabilities and create a leaner company with the potential for higher growth. The company agreed to a $7 billion sale of oil and gas fields to Apache Corp last week.

(Editing by Jacqueline Wong)

India’s state-run Oil and Gas Natural Corp (ONGC.BO: Quote, Profile, Research, Stock Buzz) is
well-positioned to buy the embattled UK firm’s 35 percent
stake, worth $966 million by one estimate, in an offshore
Vietnamese gas field in which it already owns 45 percent.

China’s CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz) (CEO.N: Quote, Profile, Research, Stock Buzz) and Sinopec (0386.HK: Quote, Profile, Research, Stock Buzz)
(600028.SS: Quote, Profile, Research, Stock Buzz) (SNP.N: Quote, Profile, Research, Stock Buzz), and Thailand’s PTTEP (PTT.BK: Quote, Profile, Research, Stock Buzz) are also
likely to show interest in BP’s stake, bankers and analysts
familiar with the asset told Reuters last week, although ONGC’s
presence in the project gives it an edge.

A deal would be a welcome change for India, which has been
playing the underdog to China in the hunt for natural resources
as the two Asian countries seek energy security to feed fast
economic growth.

Hanoi insists BP give priority to its partners in the
project.

BP is scrambling to raise billions to pay for the Gulf of
Mexico disaster, the worst oil spill in U.S. history, and ONGC
and PetroVietnam, which owns the rest of the project, are
waiting to pounce and capitalise on the British giant’s
vulnerability.

India, whose plodding approach to overseas deals has
allowed other targets to slip away, appears to be moving
quickly this time to clinch a deal.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For Breakingviews on BP’s asset sale, click:
[ID:nLDE66K0J6]

For a Factbox on BP’s asset sale, click: [ID:nN12148109]

For a related story, click: [ID:nSGE66K0I0]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

India’s oil minister and the head of ONGC both said the
company may make a joint bid with state-owned PetroVietnam.

“Just now I have met the Vietnam prime minister,” Oil
Minister Murli Deora told Reuters on Thursday.

“In principle, he has agreed to our proposal. Now we have
to negotiate with BP,” said Deora, who is in Vietnam along with
other government officials and executives from Indian oil and
gas firms to boost ties in the energy sector.

Vietnam Prime Minister Nguyen Tan Dung welcomed greater
investment from India in the oil and gas sector, India’s
petroleum ministry said in a statement.

Analysts said a deal makes strategic sense for ONGC.

“ONGC has been looking at assets globally, and they haven’t
had much success over the last 12 to 18 months,” said Atul
Rastogi, analyst at Daiwa Securities SMBC Co Ltd.

“They already have a stake, they know the field, they know
the asset, so in that sense it’s probably better than going to
a completely new area,” Rastogi said of Nam Con Son.

GOVERNMENT CONNECTIONS

ONGC’s plan to form a joint venture with PetroVietnam could
help it secure a deal, a source who has advised ONGC on
previous M&A transactions told Reuters.

ONGC has yet to mandate banks to advise it on its interest
in BP’s stake. Bankers, some experts say, are unlikely to be
closely involved in a deal as the companies and governments may
work out a structure on their own.

“The deal is likely to be played out between these
government-run companies,” the source said.

The person was not authorised to speak publicly about the
matter and declined to be named.

A BP spokesman said the company was “exploring divestment
options” for its interest in the Nam Con Son gas project, which
comprises stakes in the Lan Tay and Lan Do gas fields, the Nam
Con Son pipeline and the Phu My power generation project.

As of late Thursday, it was still unclear what structure
the bid from ONGC will take.

R.S. Sharma, ONGC’s head, told Reuters the firm may join
with state-run Oil India (OILI.BO: Quote, Profile, Research, Stock Buzz) and GAIL (GAIL.BO: Quote, Profile, Research, Stock Buzz) to buy
BP’s stake. [ID:nBMA008055]

“We may take Oil India and GAIL with us. Modalities are
being worked out. We may partner PetroVietnam. It all depends
on discussions and negotiations,” Sharma told Reuters from
Vietnam.

India’s plodding state energy and mining firms are trying
to raise their game. Firms such as ONGC, Coal India and Indian
Oil Corp (IOC.BO: Quote, Profile, Research, Stock Buzz) have been promised more autonomy as they look
overseas for deals.

“A lot of pressure is coming from the government of India
because, strategically, they have to reduce dependence on
imports, and like China one way is to acquire stakes in assets
abroad,” Rastogi said.

“But they have been slow. Part of the reason is they have
to get government approval… and they’ve lacked the
flexibility to go out and bid aggressively.”
(Additional reporting by Nidhi Verma in NEW DELHI; Editing by
Tony Munroe and Anshuman Daga)

Energy Resources, whose Ukhaa Khudag mine is roughly 245 km
from the Chinese border, will be the first company listed in Hong
Kong to be fully based and operated in Mongolia.

The offering would be sponsored by Citigroup (C.N: Quote, Profile, Research) and JP
Morgan (JPM.N: Quote, Profile, Research), the sources said. All three sources declined to
be named because they were not authorised to speak publicly about
the matter.

Mongolia is attracting serious attention from global
investors after sealing a deal in October with Ivanhoe Mines Ltd
(IVN.TO: Quote, Profile, Research) and Rio Tinto Ltd (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research) to develop the $3
billion Oyu Tolgoi mine, one of the world’s biggest untapped
copper and gold deposits.

Now, Mongolia’s domestic companies are seeking foreign
capital to help them expand, and the government is trying to
connect local companies and its stock market with the rest of
Asia — from Hong Kong to Korea to Japan — hoping to turn
domestic franchises into regional ones.

Earlier this year, media reports said Energy Resources was
seeking either a London or a Hong Kong IPO.

The company’s peers in Hong Kong — Mongolian Energy Corp
(0276.HK: Quote, Profile, Research) and SouthGobi Energy Resources (1878.HK: Quote, Profile, Research) — operate
mines in Mongolia but are headquartered offshore in Hong Kong and
Canada, respectively.

Hong Kong has long been a natural destination for emerging
Mongolian champions, given its diversified investor base,
proximity to mainland China, and China’s hunger for Mongolia’s
copper, iron ore, gold and coal.

Citigroup and JP Morgan declined to comment.
(Additional reporting by Clare Jim; Editing by Chris Lewis)

Asia’s energy investment bankers are busy doing their homework on BP’s stake in the $1.3 billion Nam Con Son gas project offshore of Ho Chi Minh City.

China’s CNOOC and Sinopec, as well as Thailand’s PTTEP and India’s ONGC — already a partner of BP’s in Vietnam — are likely to show interest in BP’s stake in the project, bankers and analysts who are familiar with the asset told Reuters.

BP, among the biggest foreign producers of natural gas in Vietnam, discovered four gas fields in the southern part of the country roughly 20 years ago. The British giant also has a gas-fired power station and a pipeline there. Together, they are known as Nam Con Son, Vietnam’s largest gas project.

If and when Nam Con Son will be put on the auction block remains to be seen. But some bankers say Asian interest will be strong, especially from Thailand and India, who have regional ambitions but often play second-fiddle to China’s outbound M&A dealmaking prowess.

A BP spokeswoman in Vietnam declined to comment when contacted by Reuters. CNOOC spokesman Xiao Zongwei also declined to comment, and Sinopec declined to confirm any interest in Nam Con Son. Officials from ONGC were not immediately available for comment.

The British oil company announced a $10 billion asset sales program in June as part of a broader set of moves designed to ease pressure from the U.S. government.

“If they (BP) want to make $10 billion through asset divestitures — it’s a discreet field and there will be a lot of buyers for it,” said an Asia-based investment banker who has advised Chinese energy companies on outbound deals.

The banker, who was not authorised to speak publicly about the matter and declined to be named, added that investment bankers from multiple banks are busy doing due diligence on Nam Con Son, and are trying to convince BP that the project would be an easy asset to sell.

“We haven’t looked at it yet as BP hasn’t opened the bid officially,” PTTEP CEO Anon Sirisaengtaksin told Reuters.

“But (we) heard people say it wants to sell non-core assets.”

FLAT GROWTH

Vietnam’s relatively small status as an oil producer and flat production growth over the last five years means Nam Con Son is unlikely to attract global players such as Exxon Mobil and Chevron, some analysts say.

“With crude reserves of 4.5 billion barrels, the potential there is moderate,” said Neil Beveridge, a Hong Kong-based senior oil analyst at Sanford Bernstein.

“While I expect to see a bit of (production) growth going forward, I don’t think it has the potential to yield the large discoveries that would attract the supermajors.”

U.S.-based ConocoPhillips, Korea National Oil Corp. and Malaysia’s Petronas, have all flocked to invest in Vietnam, even though the southeast Asian frontier market is deemed to be risky and opaque for investors.

Analysts say Chinese oil majors could also come up against political opposition in Vietnam, where suspicion of China runs high due to the territorial disputes between the countries in the South China Sea.

BP has multiple partners in the Nam Con Son project. The exact breakdown of its ownership stake in each portion of the project was not immediately clear. Government-run PetroVietnam is also a partner in the project. BP’s website says the project is worth $1.3 billion.

The assets are considered a high-quality venture that BP — desperate to raise cash for its colossal $20 billion clean-up bill — could easily drum up interest among Asia’s energy giants, many of whom are eager to expand into Southeast Asia.

“ONGC and PTTEP are possible,” Sanford Bernstein’s Beveridge said. “They are active in Vietnam and are always looking for overseas assets.”

Elsewhere, chatter is growing louder that the British giant is seeking deals in other parts of the world.

On Sunday, a source told Reuters that BP is in talks with U.S. oil and gas company Apache Corp and other companies over potential asset sales, but added those sales are still at an exploratory stage.

Also mentioned in media reports and analyst notes as potential disposals: BP’s partnerships in Venezuela, its 60 percent stake in Argentina’s Pan American Energy and its stakes in the Cusiana and Cupiagua fields in Colombia.

CNOOC, China’s largest offshore oil producer, is seen as an interested party for BP’s Pan-American stake after it bought a 20 percent holding when it agreed in March to pay $3.1 billion for half of BP’s partner, Bridas Corp.

CNOOC’s bigger peer PetroChina is “open to closer ties” with BP, but declined to give specifics about involvement in asset sales, PetroChina’s head of investor relations Mao Zefeng told the Financial Times in an article published on Monday.

(Additional reporting by Pisit Changplayngam in BANGKOK, Ho Binh Minh in HANOI, and Pratish Narayanan in MUMBAI; Editing by Michael Flaherty and Muralikumar Anantharaman)

(For more business news on Reuters India click in.reuters.com)

Consultants, bankers and analysts are flocking to Mongolia,
hoping the government values economic priorities more than
politics as it tries to pull the bulk of its 3 million citizens
out of poverty.

Many are eager to remind Mongolia that China will remain
its dominant resources buyer and investment partner due to
geographic location and insatiable resources demand in the
world’s fastest growing major economy.

“China is the principal market for the majority of what
Mongolia will be producing and, as a result, we expect Chinese
investment interest will be strong in Mongolia because clearly
the Chinese companies have the market linkages inside China,”
Graeme Hancock, senior mining specialist at the World Bank,
said at the Frontier Securities’ Mongolia Capital Raising
Conference in Ulan Bator.

“However, I do recognize and have observed during my time
in Mongolia some concern about Mongolia being dominated by
Chinese investment,” Hancock added.

“So, while there will be a lot of investment from China,
there will be limits to that investment. There will need to be
a lot of partnership arrangements with Mongolian companies to
facilitate Chinese investment.”

China, for its part, has been clear about its economic
ambitions in the northern land of windswept grassland.

More than 70 percent of Mongolia’s exports went to its
southern neighbour last year. China’s coal giant Shenhua is
pitching for a slice of Tavan Tolgoi, one of the world’s
largest untapped coal deposits, and CIC, China’s $300 billion
sovereign wealth fund, has backed Mongolia-focused miners such
as SouthGobi Energy Resources Ltd (1878.HK: Quote, Profile, Research) (SGQ.TO: Quote, Profile, Research).

What’s more, the bulk of Mongolia’s oil is being produced
by Chinese firms and most of the big projects now being
developed — including Ivanhoe Mines’ (IVN.TO: Quote, Profile, Research) $5 billion
copper-gold project at Oyu Tolgoi — are also counting on
surging Chinese demand.

ALARM BELLS

These developments continue to sound alarm bells among
Mongolia’s political elite as the government formulates
investment agreements on strategic assets such as Tavan Tolgoi,
and massive rail and infrastructure projects.

Feeding into the debate is Mongolia’s determination to
forge its own path and shed its historical vulnerability as a
landlocked country sandwiched between Russia and China.

“Mongolia has been quite careful about its sovereignty –
we don’t want to be too dependent on one country,” said Oyun
Sanjaasuren, a lawmaker and former foreign affairs minister.

“Theoretically, we want to have a one-third, one-third, and
one-third balance,” Oyun added, referring to China, Russia and
a third country such as Japan or the United States.

Mongolia originally planned to sell as much as 49 percent
of Tavan Tolgoi to a foreign bidder, but cancelled the sale
early this year in favour of 100 percent state ownership, with
plans to sign a development contract without giving any equity
away.

Now, it plans to divide the deposit in two parts, one for
Mongolia, the other for foreign development, although a final,
detailed plan about foreign involvement – including Shenhua’s
– has yet to emerge.

INDUSTRIAL PARK, RAILWAY

Tavan Tolgoi’s development plan isn’t the only issue
simmering inside the halls of the State Great Hural.

Just how to shift the country’s resources out of its vast
interior is also crucial to making its mining operations
economically feasible over the long term, analysts say.

Mongolia aims to build a massive industrial park in
Sainshand, capital of Dornogovi Province, to help transport
metals and coal to customers around the world.

The government is receiving proposals from engineering
companies and hopes to move forward with a plan this year. The
facility will include copper smelting and coal processing
plants, as well as railroads to and from the park.

In April, Prime Minister S.Batbold threw his support behind
a controversial east-west railway plan, which will connect
Tavan Tolgoi to the eastern city of Choibalsan via Sainshand.

“The Boston Consulting group has identified there are other
market opportunities besides China, such as Korea, Japan,
India, and Taiwan for both coal and copper,” said Ganbat
Chuluunkhuu, adviser to the minister for road, transport,
construction and urban development.

“The idea is to have multiple export opportunities and,
number two, to not be dependent on one trading partner,” Ganbat
added, referring to China.

“In addition to Chinese export hubs via Chinese seaports,
we would have export opportunities via Russian seaports to
reach markets in Japan, Korea, and elsewhere.
(Editing by Ian Geoghegan)