UPDATE 1-China State Grid officials visit Abengoa's Brazil assets for sale -sources

(Adds response from State Grid, background on Abengoa’s Brazil operations, adds BRASILIA to dateline)

SAO PAULO/BRASILIA, April 5 (Reuters) - Officials from China State Grid visited energy transmission projects in Brazil under construction by Abengoa SA to evaluate the merits of a takeover of the assets that had stalled last year when the Spanish firm ran into financial problems, two sources confirmed on Tuesday.

One of the sources, a federal official close to the negotiations, said the sale of all of Abengoa’s energy projects in the country to State Grid is the method preferred by the government, as the Chinese firm is sufficiently capitalized to assure the completion of the projects.

The source said the government wants to avoid a piecemeal sale of Abengoa’s Brazilian assets, which include a major transmission line linking the massive Belo Monte hydroelectric dam in the Amazon to consumer markets.

One of the sources in the private sector was not authorized to speak but had intimate knowledge of the negotiations. The federal official preferred to remain unnamed.

A piecemeal sale would require more time than a single sale which would likely mean fewer delays in completing the projects.

State Grid, which has invested more than $1 billion in Brazil’s energy sector since 2010, had no comment about the visit of its representatives to see Abengoa’s assets. The company simply said “there is interest in Abengoa assets but no formal proposal has been made.”

Abengoa officials did not respond to a request for comment.

The company also has projects to link wind and solar energy farms to the national grid.

Analysts have had difficulty estimating the value of Abengoa’s assets in Brazil, many of which are already in operation and generating revenue. It has about 6,000 kilometers of transmission lines under construction that will demand billions of dollars in investments.

The company also has debts of more than 800 million reais ($218 million) with equipment suppliers in the country, according to the electricity industry association Abinee. ($1 = 3.67 reais) (Writing by Reese Ewing; Editing by G Crosse and Matthew Lewis)