* ONGC and Oil India likely to team up for joint bid
* Kuwait Petroleum, Mitsui among others eying Murphy's assets
* Thailand's PTT decides not to bid (Adds confirmation on ONGC, Oil India joint bid, Oil India comments)
By Denny Thomas and Nidhi Verma
July 17 (Reuters) - Top Japanese trading house Mitsubishi Corp has submitted a non-binding bid to buy Murphy Oil Corp's Malaysian oil and gas assets valued at about $2.5 billion, a person familiar with the matter told Reuters.
India's state-owned Oil & Natural Gas Corp and Oil India Ltd are among the other suitors preparing to submit bids for the Murphy assets, separate sources with direct knowledge of the process said.
ONGC and Oil India would "most likely" submit a joint bid for the assets, one of the sources directly involved in the process said, something they have done in the past for overseas energy assets.
A final decision on the Indian firms' bid will be made by the government, another person familiar with the process said.
The Indian companies are likely to submit preliminary bids for the Murphy stake by the end of this month after getting mandatory internal approvals, said the sources, who declined to be identified as the process is not public.
"We want energy security. The focus of energy security should be to get the resources to India if need be. It should not be for investment's sake only," a senior Indian government official told Reuters.
Arkansas-based Murphy, which has interests in oil and gas fields in Malaysia, Vietnam, Indonesia, Brunei and Australia, has invited bids for a 30 percent stake in its Malaysian assets, Reuters previously reported.
"ONGC's strategy has always been to increase production overseas and it has largely been because in the domestic market, they have not had much success," said Prakash Joshi, director of equity research at IDFC Institutional Equities.
India's state explorers including ONGC, India's largest oil and gas exploration company, have been hunting overseas as they struggle to arrest decline from local gas fields and boost the country's energy security.
In June last year, ONGC together with Oil India acquired a 10-percent stake in a deepwater gas field in Mozambique's Rovuma basin for $2.48 billion.
In August, ONGC agreed to buy another 10-percent stake in the field from Anadarko Petroleum for $2.64 billion.
Malaysia is the biggest market in Murphy's Asian portfolio, accounting for more than 45 percent of its total 2012 net production, according to the company's website.
"These are world class assets producing significant amount of liquids and it has some upside through gas," one person familiar with the process said.
"You get access to quality oil production immediately, in substantial quantity. It has got more than 10 years' of life."
Murphy's net oil and gas production from Malaysia was about 86,000 barrels of oil equivalent per day in 2013, with total proved reserves of 125 million barrels of oil and 406 billion cubic feet (11 billion cubic metres) of gas, according to its website.
Kuwait Petroleum Corp and Japan's Mitsui & Co were among the other suitors considering a bid.
Thailand's PTT did not take part in the bidding, a senior company official told Reuters. Kuwait Petroleum did not reply to an email seeking response, while a Mitsui spokesman declined comment.
Murphy's planned sale follows similar exits by other independent U.S. energy producers such as Hess Corp and Newfield Exploration Co, both of which have offloaded their Southeast Asian operations.
The move is also prompted in part by the strong demand generated for the Newfield and Hess auctions last year, the sources added.
A Mitsubishi spokeswoman, Oil India Chairman Sunil Kumar Srivastava and ONGC Videsh, the overseas business arm of ONGC, all declined to comment. Murphy did not respond to e-mails seeking comment. (Reporting by Denny Thomas, Nidhi Verma and James Topham; Additional reporting by Sumeet Chatterjee, Aman Shah, David French, Rania El Gamal and Khettitya Jittapong; editing by Tom Hogue and Jason Neely)