Italian oil major ENI will launch a £2.7 billion counterbid for Britain's Lasmo Plc today, topping an existing offer from U.S.-based Amerada Hess Corp, industry sources said yesterday.

An announcement on the 200 pence-per share cash offer for the exploration and production company was expected at 0730 GMT today, the sources said. ENI, the world's fifth largest oil company, has long been seen as a potential buyer of Lasmo, whose spread of assets in North Africa and elsewhere suit the cash-rich Italian giant's upstream expansion plans.

But Amerada was seen by analysts as having offered Lasmo a very full price with its November 6 cash and shares bid, which at the time valued Lasmo shares at 180 pence. Lasmo is expected to move quickly to recommend the new offer.

"It's clearly much better than the one on the table," said one industry source. "This is a knock-out blow," another industry source told Reuters. Many analysts were alarmed to see Amerada bid for a pure exploration and production group while oil prices appeared to be at the top of the price cycle.

And ENI, under pressure to catch up with the oil supermajors - ExxonMobil, Royal Dutch/Shell Group, BP Amoco and TotalFina Elf, has now raised the stakes even further. Adding Lasmo would have enabled New York-based Amerada to reach overseas to build its oil business, making it a top exploration and production company outside of the oil majors like ExxonMobil.

Under Amerada's 70 per cent cash offer, the UK company's shareholders would get £98.29 and one new Hess share for every 78.7 Lasmo shares. Amerada would also assume £1.1 billion in debt.

Lasmo had net proved oil and gas reserves at the end of 1999 of 830 million barrels, and the addition of its wells would have raised Amerada's production to an expected 582,000 barrels of oil equivalent per day next year from 374,000 this year.

Amerada already holds 25 per cent of smaller UK explorer Premier Oil Plc, and analysts said its purchase of a second British oil company may start the long-awaited consolidation of the UK oil and gas industry. UK companies Enterprise and BG Group are also considered potential targets in the industry.