* Aim to sell stake by year end - source
* China's Huadian one of parties in talks - sources
* Mozambique 15 pct stake now worth just $1.5 bln - analyst
* Eni looking to raise 8 bln euros from disposals
By Oleg Vukmanovic and Stephen Jewkes
MILAN, May 29 (Reuters) - Talks between Eni andsuitors including Chinese state utility Huadian for a stake ofaround 15 percent in the Italian oil major's prized Mozambiquegas field are dragging on due to differences over price,industry and banking sources said.
State-controlled Eni is looking to sell around 8 billioneuros ($8.8 billion) of assets in the next five years to fundgrowth in new markets and help ringfence dividends.
The biggest foreign oil producer in Africa plans to raisearound a quarter of these proceeds from the sale of minoritystakes in top acreage such as Mozambique, Congo and Ghana,without giving up operatorship.
In Mozambique, Eni is looking to sell down its 50 percentstake in its Area 4 field. But its insistence on remainingoperator is likely to exclude majors such as Exxon andShell who tend to favour controlling investments in bigoil and gas projects, the sources said.
"Eni's been talking to Huadian for a while, though there areother interested parties too. The aim is to close this year,"one source with knowledge of the matter said.
Eni declined to comment. Huadian did not immediately replyto an email for comment.
Area 4 is located in Mozambique's Rovuma Basin, where gas inplace amounts to some 85 trillion cubic feet -- one of therichest gas discoveries in recent times.
Plans are to convert it into liquefied natural gas, or LNG,using onshore refrigeration plants so that it can be loaded ontotankers and shipped to consuming markets in Asia.
"There is interest ... it remains to be seen if Eni hasreadjusted its pricing expectations," another banker familiarwith the matter said.
The field's huge productive capacity attracted peakvaluations two years ago, when Eni sold 20 percent to China'sCNPC for $4.2 billion, amid strong competition for reserves thatcould underpin one of the world's biggest gas export plants.
But a halving of oil and gas prices since then, combinedwith an upcoming surge in global LNG export capacity and slowingdemand, has dampened buyers' enthusiasm while Eni has beenreluctant to budge on price, sources said.
CHINESE INTEREST
An oil analyst familiar with the Italian major said hecalculated a 15 percent stake in the Mozambique field would beworth just $1.5 billion at today's oil prices.
"Given the price uncertainty, Eni could end up selling downits Congo acreage first since that is all oil, easy to extractand very fast to get to market," the analyst said.
In April CFO Massimo Mondazzi said Eni would sell at leastone exploration asset this year.
Eni, led by former exploration and production unit bossClaudio Descalzi, has earmarked 90 percent of future spend onfinding oil and gas, and plans to focus on new areas such asAsia.
"There's a lot of Chinese interest in Mozambique, with morethan one second-tier Chinese company in the framework," one ofthe sources said.
Chinese independent buyers have started to emerge asimporters of LNG as Beijing allows them to use idle importterminal capacity and build their own facilities.
Huadian recently took a 5 percent stake in an $11 billionCanadian gas export project and said it was planning to build areceiving terminal on China's southeast coast.
But if new Asian buyers are eying gas supply opportunities,falling oil prices have tempered the appetites of the majors.
After a 5-year spending spree of $180 billion, Asiannational oil companies took a break last year with spending byChina NOCs just $5.2 billion, says oil-gas consultancy 1Derrick.
"Why lash out on undeveloped assets needing heavy investmentwhen you can buy cheaper in places like the U.S., Canada and theNorth Sea," 1Derrick Managing Director Mangesh Hirve said.
Another complication for potential investors in Area 4 isuncertainty over if and when Eni will start work withneighbouring Anadarko Petroleum to coordinatedevelopment and share costs on their two separate but straddlingLNG export schemes in Mozambique.
"The problem for current stake sale talks is that there isnew uncertainty over whether unitisation will happen - whichwasn't there when CNPC paid," a banking source said, adding thiscould apply downward pressure to the Area 4 price. (Editing by Alison Williams)
