MELBOURNE, July 20 (Reuters) - Total SA TOTF.PA is unlikely to take on ExxonMobil XOM.N in a bidding war for explorer InterOil Corp IOC.N , the French giant's partner in a rich gas field in Papua New Guinea, analysts said on Wednesday.
ExxonMobil this week trumped an offer from Oil Search, which was backed by Total. Oil Search is due to declare on Thursday whether or not it will match ExxonMobil's $2.2 billion bid.
ExxonMobil and Total both want to simplify the ownership of the Elk-Antelope gas field by taking out InterOil's 36.5 percent stake. This would clear the way for the majors to tie together their rival gas export projects, PNG LNG and Papua LNG.
Analysts said it made more sense for Total to let ExxonMobil take over InterOil. Using Elk-Antelope to feed an expansion of ExxonMobil's existing PNG LNG plant could generate double the return compared to building Total's proposed $10 billion Papua LNG plant, they said.
"While it is possible that they go it alone, it would certainly make more economic sense if it was to be combined," said Saul Kavonic, an analyst at consultant Wood Mackenzie.
The oil majors are targeting PNG for growth as the quality of its gas, low costs and proximity to Asia's big liquefied natural gas (LNG) consumers make it one of the world's most attractive places for gas projects.
Total entered PNG in 2014, by buying a 40.1 percent stake in Elk-Antelope for $401 million up front plus future payments that could range between $594 million and $2.48 billion, based on reserves between 7.1 trillion cubic feet and 9.9 tcf, according to InterOil. Total will have to make those payments to ExxonMobil if the U.S. giant succeeds in taking over InterOil.
"Total would need to believe in material upside to want to counter-bid at this stage," Bernstein analyst Neil Beveridge said in a note.
ExxonMobil offered $45 worth of its own shares plus $7.07 per share for each trillion cubic feet equivalent above 6.2 tcfe up to a maximum of 10 tcf, while Oil Search offered 8.05 of its own shares plus $6.05 per share for each tcf above 6.2 tcfe.
Oil Search said last week two experts had concluded that Elk-Antelope most likely holds 6.43 tcf of recoverable gas, with potential for a further 1-2 tcf of gas, yet to be certified.
Total declined to comment on the bidding battle.
