"Biggest ever" carbon deal is market test: sources

LONDON (Reuters) - UK-based INEOS Group's prospective 500 million euros ($779.5 million) sale of emissions-cutting facilities in Asia is a huge test of a jittery carbon offset market, sources close to the deal said on Thursday.

The biggest ever carbon offset deal will test a market whose future the European Union has made plain partly depends on the outcome of two-year climate talks, launched in December, to agree a successor to the Kyoto Protocol.

INEOS Group wants to off-load units which destroy one of the world's most potent greenhouse gases, called hydrofluorocarbons, which have 12,000 times the global warming potential of carbon dioxide, the sources said.

Companies and countries buy those emissions cuts in a currency of carbon offsets which they can then use to help them meet binding emissions targets for example under Kyoto.

The facilities, installed by a division called INEOS Fluor, operate at two chemical companies in India, called Gujarat Fluorochemicals and Navin Fluorine International, and one in Korea, called Ulsan Chemical Co Ltd, a member of the Foosung Group.

"It's a massive test of the market," one source familiar with the deal told Reuters.

The INEOS sale implied a roughly 10 euros profit margin per tonne of 30-50 millions tonnes of emissions cuts through to 2012, the source added, valuing the deal at up to 500 million euros.

UNEP data show that the facilities have already produced, or issued, 18.2 million tonnes of carbon offsets from an estimated pipeline of 54.5 million tonnes through 2012.

The companies have already sold much if not all of their issues offsets, called Certified Emissions Reductions (CERs), the source said, which would imply a remaining pipeline of 36.3 million tonnes for sale.

The deadline for tenders was Monday, a second source familiar with the deal said, confirming the other details.

An INEOS Fluor spokeswoman declined to comment.

Morgan Stanley is advising on the sale, the sources said. Morgan Stanley declined to comment.

(Reporting by Gerard Wynn)