Imperial Energy confirms interest from second potential buyer

Imperial Energy has confirmed it is holding talks with a second potential buyer in a move which pitches China and India - two of the world's most energy hungry nations - head to head.

Shares in UK-based Imperial rose 7.5% to 1,115p after it announced negotiations were being held with another unnamed party, believed to be Sinopec of China.

"There can be no certainty that any offer will ultimately be made for the company or as to the terms on which any such offer might be made," Imperial said in a statement.

The exploration and production company, which has fields in Siberia, is already discussing a £1.3bn takeover from an unnamed suitor - understood to be India's Oil and Natural Gas Company (ONGC).

China and India have increasingly been targeting Russia as a future source of energy. Sinopec is developing the Sakhalin-3 oil and gas project on the Russian Pacific coast with the state oil major, Rosneft, and it bought a production unit from TNK-BP for $3.5bn in 2006.

ONGC, charged with securing overseas energy resources to power India's booming economy, is similarly a partner in the Sakhalin-1 oil and gas consortium headed by the US major, ExxonMobil.

City analysts said a third bidder could yet emerge. "In our view, a bid for Imperial is readily affordable by either ONGC, or, effectively the Chinese government," said Fred Lucas, the head of oil and gas analysis at Cazenove.

"If Sinopec has indeed entered the due diligence process late, this ironically may give ONGC more time to clear its bid - assuaging investor concerns that ONGC needs more time than most to clear domestic 'red tape'. It may also encourage other NOC bidders to enter the fray eg KNOC of South Korea."

Imperial said in November that Gazprombank, the banking arm of Gazprom, had made an approach to buy a quarter of its stock at a discount to the market price, but the talks ended without a deal.

Imperial owns oil licences in the west Siberian region of Tomsk and hopes to produce 35,000 barrels per day by the end of 2009 and 80,000 barrels by 2011.