* ONGC, PetroVietnam eye joint bid for BP Vietnam gas stake
* BP's stake in Nam Con Son project valued at $966 mln - UBS
* Both firms already partner with BP in Vietnam
* Vietnamese government says BP's partners must get priority
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MUMBAI/HONG KONG, July 22 (Reuters) - BP's (BP.L) woes may enable India to get the upper hand over China for at least one coveted energy asset.
India's state-run Oil and Gas Natural Corp (ONGC.BO) 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) (CEO.N) and Sinopec (0386.HK) (600028.SS) (SNP.N), and Thailand's PTTEP (PTT.BK) 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. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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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.
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) and GAIL (GAIL.BO) 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) 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)