2nd UPDATE: India Starts Talks To Buy BP Stake In Vietnam Gas Block

(Adds comments from India's oil minister, ONGC Chairman, PetroVietnam official) By Rakesh Sharma Of DOW JONES NEWSWIRES NEW DELHI (Dow Jones)--India Thursday began talks with Vietnam over the possibility of Oil & Natural Gas Corp. (500312.BY) acquiring BP PLC's (BP) stake in a gas block in the southeast Asian nation, as the world's second-fastest growing major economy seeks to secure more petroleum assets worldwide. Earlier Thursday, India's oil minister Murli Deora met Vietnamese Prime Minister Nguyen Tan Dung to discuss the matter, Deora told Dow Jones Newswires after the meeting. The Indian state-run explorer has already expressed its interest to Vietnam Oil and Gas Group, or PetroVietnam, to buy BP's stake in the Nam Con Gas project, ONGC Chairman R.S. Sharma said separately. ONGC is open to purchasing BP's stake in the Nam Con Gas project on its own or jointly with PetroVietnam, Sharma added. "Yesterday (Wednesday), we have indicated our willingness to PetroVietnam to buy BP's stake. Let us see now," Sharma said, adding that BP has informed PetroVietnam about its plan to exit the Nam Con Son gas project. BP is selling assets in North America and Egypt to Apache Corp. (APA) for $7 billion to fund mounting costs from the massive oil spill in the Gulf of Mexico. BP also said this week that it plans to sell gas fields and a pipeline in Vietnam, as well as exploration licenses in Pakistan. India, which imports four-fifths of the crude oil it requires, has been scouting for investment opportunities globally as part of its efforts to feed its fast-expanding economy. The Nam Con Son project includes Lan Tay and Lan Do gas fields in Block 06.1 as well as a pipeline and the gas-fired Phu My power plant. ONGC's overseas investment arm, ONGC Videsh Ltd., acquired the exploration license for block 06.1 in 1988, but it later sold a part of its stake to BP and PetroVietnam. BP currently holds a 35% stake in the block and is also the operator. ONGC owns 45%, while PetroVietnam has the remainder. Sharma said "real business discussions" with PetroVietnam will start soon. "All possibilities are there. We will work out the modalities," he said. Do Van Hau, deputy general director of PetroVietnam, declined to comment on talks with ONGC. "We haven't made any decision yet. Nothing can be said at this stage," he said. Tom Grieder, IHS Global Insight's energy analyst, said both ONGC and PetroVietnam are likely to try to bolster their stakes in the gas project. Vietgazprom--a joint venture between PetroVietnam and Russia's Gazprom--as well as Canada's Talisman Energy, could also be interested in buying BP's stake, Grieder said in a note. Talisman is looking to pursue gas-to-power projects in the Nam Con Son basin and grow its operations in Vietnam, he said. ONGC's Sharma declined to disclose the valuation of BP's stake in the gas block, but said ONGC has the resources to buy BP's stake. Sharma said in February that ONGC may invest between $25 billion and $30 billion over the next 10 years to buy and develop energy assets overseas as part of efforts to obtain 20 million metric tons a year, or 402,000 barrels a day, of oil and oil-equivalent gas from overseas assets by 2020. ONGC Videsh produced 6.49 million tons of crude oil and 2.38 billion cubic meters of gas in the financial year ended March 31. -By Rakesh Sharma, Dow Jones Newswires; +91-11-4356-3305; santanu.choudhury@dowjones.com (Vu Trong Khanh in Hanoi, Eric Yep in Mumbai and Santanu Choudhury in New Delhi contributed to this article) (END) Dow Jones Newswires July 22, 2010 06:40 ET (10:40 GMT)