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(Corrects fifth paragraph to show that HOVENSA refinery was closed last year)
* Elliott Associates may nominate directors to Hess board
* Hedge fund may also buy $800 mln of Hess shares
* Hess to close New Jersey refinery, sell 20 oil terminals
* Hess says moves will free up $1 bln in capital
* Shares up 6 pct
Jan 28 (Reuters) - Hess Corp on Monday announced plans to sell its oil storage terminal network and exit the oil refining business, after activist hedge fund Elliott Associates said it was considering nominating directors to the Hess board.
Hess' decision to become predominantly an exploration and production company is similar to the strategy employed by others such as ConocoPhillips and Marathon Oil, which spun off their refining operations in recent years.
"Hess is now facing some activist shareholder interest. In order to deflect or preempt pressure from Elliot, Hess announced it will be becoming a pure E&P company," said Pavel Molchanov, an oil analyst for Raymond James.
Molchanov said the move to simplify Hess' asset base should be appreciated by investors. Hess shares rose 6 percent in afternoon trading.
Hess has been shifting away from refining since early last year, when the HOVENSA refinery, a joint venture between Hess and Venezuela's PDVSA, was closed. Chief Executive John Hess has said the company's strategy is to focus on lower-risk, higher-return assets like its position in the Bakken oil shale in North Dakota.
Hess said in a statement on Monday that it received a letter from Elliott late last week saying the hedge fund might buy more than $800 million of Hess shares, or a roughly 4 percent stake.
Such a purchase would make Elliott one of the top three shareholders in Hess, according to Thomson Reuters data.
Elliott also said it was considering nominating candidates for election to the Hess board at the 2013 annual meeting.
Hess said it has not had any discussions with Elliott and does not know the hedge fund's intentions.
The oil and gas producer said its plans to sell 20 oil storage terminals and close its money-losing New Jersey refinery will free up $1 billion of capital.
The Port Reading refinery, which will be closed by the end of February, incurred losses in two of the past three years.
"By closing the Port Reading refinery and selling our terminal network, Hess will complete its transformation from an integrated oil and gas company to one that is predominantly an exploration and production company," John Hess said.
U.S. gasoline futures rose following news of the planned closure of the 70,000 barrel-per-day refinery, which raised concerns about dwindling fuel supplies on the U.S. East Coast.
Nineteen of the Hess terminals up for sale are located along the East Coast and have a combined storage capacity of 28 million barrels. The other terminal, in the Caribbean, has a capacity of 10 million barrels.
Hess has retained Goldman Sachs as financial adviser for the terminal network divestiture.
Shares of New York-based Hess were up 6.2 percent at $62.55 in afternoon trade on the New York Stock Exchange. (Reporting By Michael Erman and Thyagaraju Adinarayan; Additional reporting By Anna Driver in Houston; Editing by Sriraj Kalluvila and John Wallace)