Japan's Itochu, Mitsui eye 25pct in ONGC arm-paper

BANGALORE Dec 8 (Reuters) - Oil and Natural Gas Corp (ONGC.BO) has received bids from Japanese firms Itochu Corp (8001.T) and Mitsui & Co (8031.T) to buy a 25 percent stake in a unit of the Indian energy major, the Economic Times said. The state-run Indian firm could raise up to 50 billion rupees ($1.1 billion) through the sale of stake in ONGC Petro additions (OPaL), founded by ONGC and Gujarat State Petroleum Corp (GSPC), people close to ONGC told the paper's news channel ET NOW.

Royal Bank of Scotland and Rothschild are advising ONGC on the deal, the newspaper said on Tuesday. A spokesman at ONGC did not respond to phone calls from Reuters seeking comment.

OPaL is constructing a plant in the western Indian state of Gujarat with an expected capacity to produce 1.1 million tonnes of ethylene, 340,000 tonnes of propylene, 135,000 tonnes of benzene and 95,000 tonnes of butadiene, annually, the paper said. Last month, a senior ONGC official said Indian gas importer Petronet LNG (PLNG.BO) had shown interest in buying up to 10 percent in the petrochemical project to be set up by OPaL. [ID:nBMA006440]

ONGC has also had discussions with strategic investors in Taiwan, South Korea, China as well as Europe and is open to selling a 5 to 10 percent stake in OPaL to a technology partner, the Economic Times said, quoting a company official familiar with the proposed transaction.

ONGC will target an initial public offering for OPaL within the next one year, the official told the newspaper. ($1=46.6 rupees) (Reporting by Sumeet Chatterjee; Editing by Ranjit Gangadharan)